Deploy modified Put butterfly strategy in Nifty
The upcoming week can be approached with a low-risk strategy like modified Put Butterfly in Nifty.
Research by Quantsapp Advisory, SEBI-registered research analyst (Reg. No. INH000006332)
The Nifty closed the week ended February 3 around 17,877 with a gain of 1.07 percent. During the week, the index gyrated between 18,064 and 17,472. On the OI (Open Interest) front, marginal short covering built-up was witnessed in Nifty Jan Futures over the week gone by as there was a decrease in OI.
On the other hand, Bank Nifty January Futures gained about 2.5 percent as it closed the week around 41,680. Its future gyrated between 42,251 to 39,718, the last week. Overall, Bank Nifty ended the week with gain of about 1,018 points.
Further diving into the Nifty upcoming Weekly expiry, Nifty immediate resistance stands at 18,000 levels where nearly 59.06 lakh shares is the open interest followed by vital resistance at 18,500 levels where about 55.68 lakh shares is the open interest. On the lower side immediate support level is at 17,700 where nearly 51.96 lakh shares is the PE options open interest followed by 17,600 where nearly 63.95 lakh shares 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 43,000 where nearly 18.33 lakh shares is the CE open interest, whereas, on the lower side immediate and vital support is at 41,000, about 16.08 lakh shares, which is the PE open interest. At 40,500 about 18.39 lakh shares of PE open interest is present.
India VIX, fear gauge, decreased to 14.31 over a week-to-week basis from 17.31. India VIX has risen from the levels that has been around the lows, declined again. Further, any uptick in India VIX could start the downward move in Nifty and vice versa.
Looking at the sentimental indicator, Nifty OI PCR for the week has increased to 1.165 from 0.743. Bank Nifty OIPCR over the week increased to 1.032 from 0.477 compared to last Friday. Overall data indicates PE writers are more aggressive than CE writers in the Nifty.
Moving further to the weekly contribution of sectors to the Nifty. Private Bank contributed 128.73 points positively to Nifty. FMCG, IT and Auto were positive contributors to Nifty, with 92.50, 87.77 and 17.00 points respectively. Infra contributed negatively to Nifty by -19.89 points. Oil & Gas and Metal contributed -9.52 and -8.22 points negatively to Nifty. Power contributed -4.98 points to Nifty on the negative end. PSU Bank contributed positively to Nifty by 5.03 points. Pharma contributed -23.95 points negatively to Nifty.
Looking towards the top gainer and loser stocks of the week in the F&O segment. Shree Cement topped by gaining over 12.7 percent, followed by Firstsource Solutions 12.5 percent, Indian Hotels 11.2 percent. Whereas Adani Enterprises lost -42.9 percent, Adani Ports has lost over -17 percent, HDFC Life lost -16.8 percent over the week.
The upcoming week can be approached with a low-risk strategy like modified Put Butterfly in the Nifty.
This trade idea was published on 6 Feb 2023 by Shubham Agarwal for Quantsapp Advisory, a SEBI-registered research analyst (Reg. No. INH000006332) and an independent proprietorship, not Quantsapp Private Limited. It reflects the market on that date and is not a current recommendation.
First published on 6 Feb 2023: prices, lot sizes and expiries are those of that time. They are illustrations for education only, not investment advice. Derivatives trading carries risk; read all scheme and risk documents before trading.