Deploy modified call butterfly strategy in Nifty: Shubham Agarwal

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Bullish momentum continued in the market as Nifty rallied more than 700 points since the start of this month, Nifty closed week around 16,520 with a gain of 1 percent last week. The Nifty touched its all-time high of 16,534.80. Nifty gyrated in the 16,180-16534.80 range, and 16,400 is now working as a vital support level for Nifty. Nifty witnessed a long built upon OI (open interest) front in the week gone by.

The Bank Nifty, on the other hand, struggled to pick up momentum and traded in the broader range of 36,400-35,650. Overall, Bank Nifty ended the week with a marginal gain of 0.72% with a rally of approximately 250+ points week over week.

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 16,800 levels (where nearly 37 lakh shares built up) - the highest among all, followed by 17,000 levels with 32 lakh shares.

On the lower side, the immediate and vital support level is at 16,400 where we saw nearly 62 lakh shares, followed by 16,300 with an addition of 55 lakh shares.

Looking at the Bank Nifty's upcoming weekly expiry data. On the upper side, immediate resistance stands at 36,500 (9 lakh share) followed by 37,000 (9 lakh shares). Whereas, on the downside, 36,000 (14L shares) stand at the immediate support level and are followed by 35,500 (8L shares) as the vital support level.

India VIX, fear gauge, witnessed a marginal increase of nearly 3.40 % from 12.61 to 13.04 over the week. India VIX is trading near the lowest level of the 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 increased from 1.399 to 1.742. Bank Nifty OIPCR over the week increased from 0.875 to 1.008 compared to last Friday. Overall data indicates more of put writers over call writers in Nifty and Bank Nifty.

Moving further to the weekly contribution of sectors to Nifty. Most of the sectoral indices have contributed positively such as IT, private bank, and telecom have contributed nearly +140, +55, and +20 points respectively in the Nifty 181.76 points gain. Followed by CG, NBFC & Power. Whereas cement and pharma contributed nearly -18 and -13 points each respectively on the negative side.

Looking towards the top gainer & loser stocks of the week in the F&O segment. Tech Mahindra topped by gaining over 9.40%, followed by Cummins India 7.60%, Siemens 7.60%. Whereas, Manappuram has lost over -20.50%, Aurobindo Pharma -15.9%, Lupin -15.4% 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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