Market Outlook for June 1: Key Trends and Developments to Watch

Nifty 50 Plunges 1.5 Percent, Falls Below Key Moving Averages

On May 29, the Nifty 50 plummeted 1.5 percent, decisively falling below short-term moving averages as well as the midline of the Bollinger Bands. This decline marks a significant shift in market sentiment, with the index failing to close above the previous week's high. Additionally, short- and medium-term moving averages continued to trend downward, indicating a resurgence of bearish sentiment. The index has also broken below a rising trendline on the daily chart, further exacerbating the bearish outlook.

Key Levels to Watch

If the index witnesses follow-up selling pressure, the 23,400 and 23,250 levels will be key levels to watch. A break below these levels could allow bears to tighten their grip further. On the upside, the 23,800–24,000 zone remains a crucial hurdle. Sustaining trade above this range can open the door for a rally towards 24,300.

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Pivot Points and Resistance/Support Levels

The Nifty 50 once again failed to close above its 50-day EMA and formed a long bearish candle with an upper wick on the daily charts, highlighting its inability to sustain higher levels. Notably, this marks the third consecutive session in which the index has formed a pronounced upper wick with above-average volumes, indicating persistent profit booking at higher levels. The index is now trading below all key moving averages.

Options Data

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The maximum Call open interest was seen at the 24,000 strike for the Nifty 50, while the maximum Put open interest was seen at the 23,000 strike. The maximum Call writing was observed at the 24,000 strike, while the maximum Put writing was placed at the 23,100 strike.

Funds Flow and Put-Call Ratio

The Nifty Put-Call ratio (PCR) fell to 0.74 on May 29, from 1.02 compared to the previous session. This indicates a bearish mood in the market. The India VIX rebounded sharply by 8.03 percent to 16.18, signalling discomfort for bulls.

Other Market Metrics

A long build-up was seen in 27 stocks, indicating a build-up of long positions. On the other hand, 56 stocks saw a decline in open interest (OI) along with a fall in price, indicating long unwinding. Additionally, 114 stocks saw an increase in OI along with a fall in price, indicating a build-up of short positions.