The long-term outlook remains negative for Nifty-50 spot (9,251.50). Only a close above 10,948 will change the outlook positive for the index. However, in the short-term the index will move in a narrow range with a positive bias.

The immediate support appears at 8,925 and the next one at 8,660. The major support for Nifty appears at 8,083 and a conclusive close below that level could trigger fresh downfall for Nifty. On the other hand, Nifty index finds an immediate resistance at 9,590 and the next one at 9,955. The Nifty-50 index finds a major resistance at 10,451.

F&O pointers: Though from April 30 peak of 91.58 lakh, open interest positions slipped to 80.21 lakh, during the last three dates, open interest positions have improved from 78.26 lakh shares, signalling some stability. Monthly option trading indicates a range of 10,000 to 8,500 for Nifty, weekly options indicates (expiring on May 14), a movement between 9,000 and 9,500.

Strategy: Traders could consider a bull call spread on Nifty 50. This can be done by using weekly and monthly contracts on Nifty. Traders could consider selling Nifty 9600 May-14 call and simultaneously buying the same contract on May 28 monthly call. These options closed with a premium of ₹51.35 and ₹ 173.95 respectively. That means, it would cost ₹ 9,195 for traders (₹ 173.95-₹ 51.35; market lot 75).

If the Nifty remains weak or move narrow in range, in the initial days and then move sharply after May 14, this position would turn positive. A close above 9,622.60 will start turning the position positive. While a profit potential is unlimited, maximum loss would be premium paid (₹ 9195). The maximum loss occurs if Nifty 50 fails to move past 9622.

We advice traders hold the position, if the combined premium falls to ₹ 45 or rises to ₹ 250

Follow-up: Stop-loss would have triggered, as ITC moved exactly on the opposite direction of our expectation last week.

(Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.)