Trade setup for June 4: Can NIFTY50 hold 23,300 support on Thursday?

Indian markets are set to open on a negative note as elevated crude oil prices and weak global market sentiments are likely to sour investor sentiment on Thursday. Additionally, the FII selling remains consistent, with over ₹5,500 crore worth of Indian equities sold on Wednesday.

Brent crude oil prices cooled off on Thursday morning, after nearly touching the $100 per barrel mark on Wednesday, as investors reassessed the situation in the Middle East. Iran launched attacks on the US military facilities in Bahrain and Kuwait after the US struck Iranian vessels in the Persian Gulf and Qeshm Island on Tuesday.

The US markets witnessed a sharp pullback from record-high levels as the escalating situation in the Middle East worried investors. The Dow Jones plunged over 620 points (or 1.2%) from record highs. Meanwhile, the S&P 500 slipped 0.7%, and the NASDAQ fell nearly 0.3% on Wednesday.

Following the weak global market cues, the Asian markets opened in the red on Thursday morning. The Japanese and Korean benchmark indices plunged over 2%, and the Hong Kong markets dropped 1.3%.

NIFTY50 chart

The NIFTY50 witnessed sharp volatility throughout the session on Wednesday as the index rallied 250 points from intraday low levels. The index made an intraday low of 23,151, which was also the intraday high of April 7. Thus, the NIFTY50 filled the gap of April 8, which was a crucial anchor holding back the index in deciding the direction. On the daily charts, the index also formed a hammer pattern, indicating a reversal from lower levels. The pattern can be confirmed and validated if the index manages to close above the previous day's high level. Until then, the 20 EMA level remains key resistance for the index, with 23,300 as the crucial support.

NIFTY50 open interest

The open interest data for June 9 expiry indicate strong open interest concentration on the downside, at 23,000 to 23,300 puts, indicating a strong support zone for NIFTY50 for today’s trading session. On the other hand, the 23,500 calls hold the highest open interest, indicating strong resistance for the index.

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