For Nifty, deploy low-risk Modified Iron Butterfly Strategy this week

India

The Nifty closed the week gone by on a positive note closing at 17,332, up 1.34 percent. During the week, the equity benchmark gyrated between 17,444 and 16,858. On the open interest (OI) front, a long build-up was seen in the Nifty.

The Bank Nifty gained about 1.3 percent and closed the week at 39,310. The banking index future gyrated between 39,750 and 38,086 last week. Overall, the index ended the week 502.65 points higher and witnessed short covering built-up on OI front.

In the upcoming weekly expiry, the immediate resistance for the Nifty will be 17500, where nearly 68 lakh shares are the open interest followed by vital resistance at 18,000 where 77 lakh shares are the open interest.

On the lower side, the immediate support is at 17,000 where nearly 43.5 lakh shares are the PE options open interest followed by 16,500 where nearly 40 lakh shares are the PE options open interest.

For the Bank Nifty, on the upside, the immediate and vital resistance is at 40,000 where nearly 20.5 lakh shares are the CE open interest. On the lower side, the immediate and vital support is at 39,000 where 18 lakh shares are the PE open interest.

India VIX, the fear gauge, dropped to 18.77 from 19.97 over the week. It is trading below 20 and a decrease in India VIX has allayed fear in the market. Any downtick can push the Nifty further up or vice versa.

Looking at the sentiment indicator, Nifty OI PCR for the week decreased to 0.97 from 1.22. Bank Nifty OIPCR over the week decreased to 0.872 from 1.05 compared to last Friday. Overall data indicates CE writers are more aggressive than PE writers in the Nifty.

PVTB and OIL contributed the most on the positive side, by 174.74 and 108.55 points, respectively. IT and NBFCs contributed about 67.72 and 65.39 points. Power and capital goods contributed 14.99 and 31.46 points. FMCG contributed 24.48 points on the negative side.

Delta Corp was the biggest gainer in the F&O segment, rising 14.4 percent during the week followed by Indiabulls Housing Finance, which was up 14.1 percent. Bharat Forge gained 10 percent and MCX 9.2 percent.

Godrej Consumer Products was among the biggest losers, sliding 8.9 percent, Dabur was down 5.6 percent and Adani Enterprises 4.3 percent during the week.

The upcoming week can be approached with a low-risk strategy like Modified Iron Butterfly.

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