Trade setup on June 1: Can NIFTY50 bounce back above 23,800 on Monday?

The Indian benchmark indices are expected to open on a flat note, despite positive global market cues. The last hour of selling in the markets on Friday has led to extreme bearishness in the markets. Investors remain cautious after brutal selling and key events lined up ahead this week.

Brent crude oil prices rose 1.2% on Monday morning to near $93 per barrel, as uncertainties prevail in the Middle East, with no deal being finalised. Over the weekend, both sides exchanged proposals, seeking revisions to the deal.

The US stock market futures opened in the green on Monday, following the previous week’s robust gains. On Friday, the Dow Jones rallied 0.7% to hit a new record high. Meanwhile, NASDAQ and the S&P 500 rose 0.2% each. Investors will now focus on the non-farm payroll data and the Federal Reserve’s policy statement for the next trigger in the market.

Asian markets continued their record run on Monday morning as the rally in tech stocks lifted the Japanese and Korean markets. Japan’s Nikkei jumped 1%, Korea’s Kospi soared 4%, and Hong Kong’s Hang Seng rose 0.4%.

GIFT NIFTY futures were trading flat on Monday morning, indicating a muted start for the NIFTY50. Apart from global cues, investors will wait for the RBI’s policy decision, which will be announced later this week.

NIFTY50 chart check

Last week, the NIFTY50 index closed 0.7% lower, reversing gains of the week in the final hour of trading on Friday. The index witnessed a sharp selloff across the index heavyweights, which broke the major support levels on the technical charts. The index closed below the 20 EMA of 23,800, which is the first crucial support level. During last week’s volatility, the index never managed to cross the 50 EMA level of 24,000, which remains a key resistance.

NIFTY50 open interest analysis

Friday’s last hour of selling changed the open interest structure for the NIFTY50 index. The 23,700, 23,800, 23,900 and 24,000 calls witnessed strong open interest addition and concentration, with 24,000 CE holding the highest open interest, indicating limited upside for the NIFTY50. On the flipside, 23,000 puts hold the highest open interest, indicating a near-term support for NIFTY0’s tomorrow’s expiry.