Deploy modified call butterfly strategy in Nifty: Shubham Agarwal

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Shubham Agarwal

Mild positive mood is prevalent on Nifty as prices recovered from a low of about 15885 and closed the week on a positive note around 16338 with gain of around 0.52%.

During the week Nifty gyrated between 16398 and 15885. On the OI (Open Interest) front, long build up was witnessed in Nifty over the week gone by as there is increase in OI.

On the other hand, Bank Nifty gained about 4%, as it closed the week around 35643. Bank Nifty future gyrated between 35725 and 34071 the last week.

Overall, Bank Nifty ended the week with a gain of about 1400 points and witnessed short covering on the OI front.

Further diving into the Nifty upcoming weekly expiry, PE option writers are showing aggression. Nifty immediate resistance stands at 16500 levels where nearly 34L shares have been added followed by vital resistance at 17000 levels where 48L shares have been added.

On the lower side, immediate support level is at 16300 where nearly 40L shares have been added followed by 16000 where nearly 44L shares have been added.

Looking at the Bank Nifty upcoming weekly expiry data: On the upside, Bank Nifty immediate and vital resistance is at 36000 where nearly 14L shares have been added whereas on the lower side immediate and vital support is at 35000 where 18L shares have been added.

India VIX, fear gauge, decreased by 7% from 23.1 to 21.45 over the week, and is trading above 20. Decrease in the IV has reduced fear in market. Further, any downtick in India VIX can push upward momentum in Nifty.

Looking at the sentimental indicator, Nifty OI PCR for the week has increased to 1.137 from 1.068. Bank Nifty OIPCR over the week increased from 1.071 to 1.118 compared to last Friday.

Overall data indicates PE writers are more aggressive than CE writers in Nifty.

Moving further to the weekly contribution of sectors to Nifty: Most of the sectors are contributing on the negative side except Auto, PVTB, PSU Bank and NBFC, contributing 28.57, 161.80, 11.80 and 83.17 respectively. OIL and Metal have contributed the most on the negative side in the Nifty by 59.82 and 52.23 points respectively.

Berger Paints has the highest stock wise rollover of 96.97% followed by HDFC AMC and IRCTC with rollover standing at 94.92% and 94.03% respectively, while GNFC has the lowest rollover of 54.5% followed by Zydus Life and IOC with rollover standing at 58.27% and 59.06% respectively.

Looking towards the top gainer & loser stocks of the week in the F&O segment, Ashok Leyland topped by gaining over 14.5% followed by STAR 13.1 %, and HDFC Life 12.7%, whereas Divi's Laboratories lost over 16.00%, Jindal Steel 14.2%, and PEL 12.9% during the week.

Considering the negative momentum, the upcoming week can be approached with a low risk strategy like Modified Call Butterfly in Nifty.

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