The short-term outlook for Nifty 50 (17,026.45) has changed bearish. The index finds a crucial support at 16,773 and the next one at 16,177. A close below the latter will even alter the medium-term outlook to negative. On the other hand, immediate resistance for Nifty appears at 17,378 and a close above will arrest the bearish outlook. However, only a close above 18,188 will change the outlook positive for the index. We expect the index to move in a downward spiral in the short-term even as the long-term bullish outlook remains intact.
Traders could consider a calendar call spread using 17,000-strike calls of December and March 2022 series. We advise traders to sell the current month 17,000-call, which closed at ₹375 and simultaneously buying March 17,000-call that closed at ₹741.10. This will cost traders ₹18,305, which will be the maximum loss. The position will turn profitable if Nifty moves above 17,366 before March 2022. We advise traders to hold this position for a month and review it later.
Follow-up: Last week we had advised calendar put spread on Bajaj Auto. Those who haven't booked profits yet can do it on Monday.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.