Markets Prepare for RBI MPC Outcome: Key Developments to Watch Ahead of June 5 Trading Session

Nifty 50 Defends Crucial Support Level Ahead of RBI MPC Meeting Outcome

The Nifty 50 closed moderately higher on June 4, recovering from the day's low ahead of the RBI MPC meeting outcome due on June 5. The index has been defending the lower end of the bullish gap formed on April 8 (23,150) for the third consecutive session, with buying interest on every decline and consistently closing above 23,400. This level coincides with the 50 percent Fibonacci retracement of the April rally.

However, the lower high–lower low formation remains intact. If the index holds the crucial support level of 23,150 going forward, the possibility of an upward move toward the 23,700–23,900 range cannot be ruled out. Conversely, a decisive fall below this level could drag the index below 23,000. The immediate support is seen at the 23,300 level, according to experts.

Key Levels for the Nifty 50

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The Nifty 50 formed a bullish candle on the daily charts following bullish reversal pattern formations in the previous two sessions, while consistently defending the April 8 bullish gap. However, the technical and momentum indicators are not aligned, as the index continues to trade below all key moving averages, with short- and medium-term moving averages trending downward. The RSI stood at 41.72 and remained sideways below the signal line, while the MACD sustained below the reference line with an expanding red bar in the histogram.

Nifty Bank Outperforms, but Remains Below Key Resistance Levels

The Nifty Bank outperformed the Nifty 50 and formed a bullish candle on the daily timeframe for the third consecutive session. It closed above the midline of the Bollinger Bands (54,200) and held above the 50 percent Fibonacci retracement of the April rally, signalling an improving trend. However, it failed to close above the 20-day EMA (54,340). The RSI rose to 48.57 and sustained above the bullish crossover level, while the MACD remained positive with an expanding green bar in the histogram.

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Key Levels for the Bank Nifty

Options Data

The 24,000 strike holds the maximum Call open interest (with 1.16 crore contracts) for the Nifty, which can act as a key resistance level in the short term. The maximum Call writing was observed at the 24,200 strike, followed by the 24,000 and 23,800 strikes. On the Put side, the maximum Put open interest was seen at the 23,000 strike (with 79.94 lakh contracts), which can act as a key support level for the Nifty.

Funds Flow (Rs crore)

Put-Call Ratio

The Nifty Put-Call ratio (PCR) declined to 1.00 on June 4, from 1.02 compared to the previous session. A convincing fall below the 15.5 level is essential for bulls to regain comfort and confidence in the market.

India VIX

The fear index, India VIX fell 2.41 percent to 15.88 after moving within a narrow range.

F&O Data

A long build-up was seen in 71 stocks, indicating a build-up of long positions. 35 stocks saw a decline in open interest (OI) along with a fall in price, indicating long unwinding. 65 stocks saw an increase in OI along with a fall in price, indicating a build-up of short positions. 45 stocks saw short-covering, meaning a decrease in OI, along with a price increase.

Stocks Under F&O Ban

The following stocks are banned under the F&O segment: Amber Enterprises India, Kaynes Technology India.