Raja Venkatraman recommends three stocks for 3 June

Outlook for Trading

When the market opened with a gap down on Nifty expiry, it initially raised expectations of a further decline toward the much-discussed support at 23,200. However, a swift recovery after the early volatility triggered renewed buying momentum and briefly accelerated the rebound.

Overall, recent market behaviour continues to be heavily influenced by overseas developments. On several sessions, bullish starts have faded as intraday pullbacks cap gains and flatten price action. Tuesday was no exception, with the index largely holding near its highs but trading in a subdued, directionless manner. Intraday movement remained muted, leaving little for traders in what was an otherwise dull session.

In our previous week’s note, we had observed: “The moves are too tentative as yet to be meaningful from the point of view of drawing any specific conclusions. So, at best, one can only state that the declines appear to be on hold”. That assessment still holds. The market continues to churn within a narrow band, attempting higher levels, but those efforts remain lacklustre and lack conviction.

In currency markets, USDINR appears to have moved into a neutral zone after a phase of appreciation, with recent signs of revival suggesting increased volatility ahead of the RBI policy decision. The Reserve Bank of India, after some hesitation, has been actively selling dollars to contain depreciation pressure. However, with other global currencies also weakening against the dollar, rupee softness has persisted. As noted earlier, a weaker rupee is often accompanied by either range-bound or bearish equity market conditions—an alignment that is currently playing out.

On the daily charts, bearish pressure remains contained, with a meaningful shift in bias likely only if Nifty moves above 23,000. While the June series has opened on a volatile note, the broader outlook remains unclear, with no decisive trend emerging. A piercing candle formation on Tuesday has, however, created the possibility of another attempted recovery.

The 23,200–23,300 zone continues to act as a well-tested support area. Momentum indicators, particularly the Relative Strength Index (RSI), are showing early signs of divergence and will require confirmation before any trend reversal can be established. Longer-term trendline support is also expected to play a key role in stabilising price action.

With markets still closely tracking US data releases, short-term knee-jerk reactions are likely to persist. Until the earnings season gathers full momentum, this state of uncertainty and choppy trade may continue.

A look at the options data shows that the Max Pain level has now slipped to 23,500, suggesting that the near-term upside momentum remains capped in the absence of fresh tailwinds. With mixed signals across the market, traders continue to stay cautious as trends struggle for clear direction.

The Put-Call Ratio (PCR) has moved above 1, indicating a build-up of puts and a possible support zone forming around 23,300, where open interest concentration has shifted. Uncertainty on the geopolitical front continues to add to the hesitation in positioning.

Bank Nifty, however, is likely to remain in focus and may take directional cues from the upcoming RBI policy, with its underlying structure appearing relatively stronger than the broader market.

While indices remain range-bound and indecisive, stock-specific action continues to drive opportunities.

Raja Venkatraman is co-founder, NeoTrader. His Sebi-registered research analyst registration no. is INH000016223.

Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.