Trade Setup for June 4: Key support in focus after Nifty's 290-point slide
The Nifty continued its downward drift on Tuesday, falling for a third straight session and losing a total of 290 points in just three days. Despite opening 70 points higher, the index couldn't hold its gains and reversed sharply from the intraday high of 24,850 to close 174 points lower at 24,542.
This decline puts the Nifty just above its crucial support of 24,500. Analysts say a breach below the previous swing low of 24,462 could escalate selling pressure, potentially dragging the index toward the next support zones of 24,400–24,300, or even further down to the 50 DEMA near 24,185.
Meanwhile, the broader market sentiment remained weak. The Nifty Bank index, which hit a record high of 56,161 in early trade, slipped 303 points to settle at 55,600. Only Nifty Realty and Media managed to stay afloat, with Realty gaining 1% amid expectations of an RBI rate cut in its upcoming June 6 policy review.
Oil & Gas was the day's worst-performing index, while fertiliser stocks staged a strong rally with several counters surging over 15% on favorable global cues and positive weather forecasts.
Foreign institutional investors were net sellers, while domestic investors absorbed some pressure as net buyers.
Technical experts believe the Nifty is currently consolidating within a broader 24,500–25,000 range. Nagaraj Shetti of HDFC Securities stated that a breakdown below current levels may accelerate a slide toward lower support areas.
Rupak De of LKP Securities highlighted that a close below 24,500 might trigger fresh short positions, pushing the index towards 24,000. However, holding above this level could pave the way for a rebound toward 24,700–24,750.
The index has now closed below both its 20-day EMA and SMA, signaling short-term weakness. The near-term resistance has now shifted lower to 24,845, marking a critical barrier for any recovery attempt.
With the RBI's monetary policy decision on the horizon, markets are likely to remain volatile. Traders and investors are advised to stay cautious and watch for a decisive move beyond the 24,500–24,800 range.
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