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Deploy modified call butterfly strategy in Nifty: Shubham Agarwal

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

October 25, 2022 / 07:23 AM IST

The Nifty closes the week on a positive note, around 17574, with a gain of around 2.21 percent. During the week Nifty gyrated between 17665 - 17100. On the OI (Open Interest) front, long built-up was witnessed in Nifty over the week gone by as there was an increase in OI.

On the other hand, Bank Nifty gained about 3.69 percent as it closed the week around 40850. Bank Nifty future gyrated between 41,030 to 39,223, the last week. Overall, Bank Nifty ended the week with gain of about 1,454 points.

Further diving into the Nifty upcoming weekly expiry, Nifty immediate resistance stands at 17700 levels where nearly 60.25L shares are the open interest followed by vital resistance at 18000 levels, where about 92L shares is the open interest. On the lower side immediate support level is at 17500 where nearly 61L shares is the PE options open interest followed by 17000 where nearly 62L share is the PE options open interest.

Looking at the Bank Nifty upcoming Weekly expiry data. On the upside, Bank Nifty immediate and vital resistance is at 41000 where nearly 22.5 lakh shares is the CE open interest, whereas, on the lower side immediate and vital support is at 40500 where 21.50 lakh shares is the PE open interest.

India VIX, fear gauge, decreased to 17.22 from 18.26 over the week. India VIX is trading below 20. Decrease in India VIX has allayed the fear in the market. Further, any downtick in India VIX can push the upward move in Nifty further and vice versa.

Looking at the sentimental indicator, Nifty OI PCR for the week has increased to 1.032 from 0.912. Bank Nifty OIPCR over the week increased to 1.152 from 0.812 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. Private Bank and Information Technology contributed the most on positive side in Nifty i.e. by 213.73 and 89.91 points, respectively. Oil and FMCG contributed about 71.07 and 57.89 points, respectively on positive side in Nifty. PSU Bank and NBFC contributed positively by about 33.74 and 43.30 points, respectively. Metal contributed 11.90 points on negative side in Nifty.

Looking towards the top gainer & loser stocks of the week in the F&O segment. Canara Bank topped by gaining over 18 percent, followed by PNB 13.6 percent, Axis Bank 11.6 percent, Bank of Baroda 9.5 percent, whereas Samvardhana Motherson International lost -10.4 percent, Havells has lost over -7.2 percent, Astral -6.9 percent, over the week.

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

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sa1Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Shubham Agarwal is a CEO & Head of Research at Quantsapp Pvt. Ltd. He has been into many major kinds of market research and has been a programmer himself in Tens of programming languages. Earlier to the current position, Shubham has served for Motilal Oswal as Head of Quantitative, Technical & Derivatives Research and as a Technical Analyst at JM Financial.
first published: Oct 25, 2022 07:23 am