Deploy modified call butterfly strategy for Nifty this week: Shubham Agarwal

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After a strong upside rally of more than 8 percent last month, Nifty continued its uptrend in September and touched a fresh all-time high.

The Nifty futures during this week ranged from 17,800 to 17,260 ending the week by gaining around 1.38%. On the OI (Open interest) front, Long Built-up was witnessed in Nifty over the week gone by.

Bank Nifty, on the other hand, gave a spectacular rally of more than 1,000 points and made a long-awaited new all-time high of 38,224.70. Bank Nifty closed around 37,850.10 with a gain of approx 3%. Bank-Nifty over the week traded between 38,224.70 and 36,400. On the OI front, a long build-up was witnessed in Bank Nifty over the week gone by.

Further diving into the Nifty's upcoming Weekly expiry, Call writers showed aggression by building more positions compared to Put writers. Nifty Vital resistance stands at the 18,500 levels where nearly 54 lakh (highest among all) shares were added, followed by immediate resistance at 18,000 levels with 46L share additions. On the lower side, the immediate support level is at 17,600 where nearly 32 lakh shares were added, followed by 17,000 with the highest addition of 36L shares.

Looking at the Bank Nifty's upcoming weekly expiry data. On the upper side, Immediate resistance stands at 38000 (13L share) followed by 38500 (9L shares). Whereas, on the downside, 37500 (10L shares) stand at the immediate support level and are followed by 37000 (11L shares) as the vital support level.

India VIX , fear gauge, increased marginally around 9.10% from 13.94 to 15.21 over the week. India VIX is trading near the lowest level of a pre-covid crash. Cool off in the IV has given relaxation to the market. Further, any downticks in INDIA VIX can push the upwards momentum in Nifty.

Looking at the sentimental indicator, Nifty OI PCR for the week has decreased from 1.454 to 1.151. Bank Nifty OIPCR over the week increased from 0.931 to 0.963 compared to last Friday. Overall data indicates more call writers over put writers in Nifty.

Moving further to the weekly contribution of sectors to Nifty. All the sectors across contributed positively except OIL, Cement, Metal, and Pharma. PVTB contributed nearly around 99 points in Nifty approximately 232 points gain. Telecom and IT were the top contributors followed by PVTB.

Looking towards the top gainer & loser stocks of the week in the F&O segment. ZEEL topped by gaining over 40.00%, followed by IDEA 33.00%, IRCTC 17.00%. Whereas, SAIL has lost over 6%, AU Small Finance Bank -4.80 %, Ramco Cements -4.50% over the week.

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

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