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Traders can initiate Modified Call Butterfly strategy in Nifty this week: Shubham Agarwal of Quantsapp

The upcoming week can be approached with a modified long call butterfly strategy, especially due to prevailing bullish momentum in the markets. Nifty traded in a broader range of 17,270—17,450.

SHUBHAM AGARWAL | 13-Sep-21
Reading Time: 3 minutes

undefinedNifty traded in a broader range of 17,270—17,450 and the broader market experienced volatile moves last week. During the last expiry only, Nifty had touched a fresh all-time high of 17,499. After struggling around the top levels, Nifty finally shut shop last week with moderate gains of 0.23% at 17,370. On the OI front, Long Build-up was witnessed in the Nifty over the week gone by.

Meanwhile, Bank Nifty also witnessed consolidated moves throughout the week. It closed around 36,765.90 with a marginal loss of 0.36%. Bank Nifty over the week traded between 37,040 and 36,250. On the OI front, long unwinding was witnessed in Bank Nifty over the week gone by.

Further diving into the Nifty's upcoming weekly expiry, Call writers are showing aggression by building more positions compared to put writers. Nifty Vital resistance stands at the 18,000 levels (where nearly 31 lakh shares were added - highest among all), followed by 17,400 with 26 lakh shares. On the lower side, the immediate support level is at 17,300 with the addition of nearly 21 lakh shares, followed by 16,500 with the highest addition of 31 lakh shares.

Let's look at the Bank Nifty's upcoming weekly expiry data. On the higher side, immediate resistance stands at 37,000 (7 lakh shares) followed by 37,500 (8 lakh shares). Whereas, on the downside, 36,000 (6 lakh shares) stands as the immediate support level, followed by 34,000 (6 lakh shares) as the vital support level.

India VIX, fear gauge, decreased marginally around 3.10% from 14.54 to 14.09 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 downtick in India VIX can push an upward momentum in Nifty.

Looking at the sentimental indicator, Nifty OI PCR for the week has decreased from 1.352 to 1.273. Bank Nifty OIPCR over the week increased from 0.803 to 0.819 compared to last Friday. Overall, data indicates more of put writers over call writers.

Moving further to the weekly contribution of sectors to Nifty. Most sectors contributed positively to the benchmark, except private banks, consumer goods, infra, and pharma. Oil contributed nearly around 107 points in Nifty’s 125 points gain. Telecom and FMGC were the top contributors followed by oil stocks.

Looking towards the top gainer & loser stocks of the week in the F&O segment. Vodafone Idea topped by gaining over 15.80%, followed by IRCTC 15%, Voltas 11.10%. Whereas Apollo Hospitals lost 5.90%, SBI Life fell 5.80% and Granules declined 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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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.

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