Indian stock market: Nifty 50 hovers around key support of 23,500. What should investors do?

Indian equity benchmarks traded in a narrow range on Monday, 1 June, as investors remained cautious amid lingering geopolitical uncertainties and continued foreign fund outflows.

After opening on a positive note, the Nifty 50 failed to hold early gains and slipped into the red, indicating a lack of strong buying interest at higher levels.

As of 12:06 PM IST, the Nifty 50 was trading at 23,516.50, down 31.25 points or 0.13%, after hitting an intraday high of 23,733.70 and a low of 23,486.00. The index had opened at 23,654.50, tracking positive global cues, but profit booking during the session erased the initial gains.

Notably, May ended in a consolidation phase, and June has begun on a similar footing, with the benchmark index hovering around the crucial 23,500 support zone.

Market participants remain focused on developments in the Middle East, crude oil price movements, foreign portfolio investor (FPI) activity, and the upcoming RBI monetary policy decision for further direction. Analysts believe sustained trade above key support levels will be critical for maintaining near-term market stability.

According to market analysts, FPIs were net sellers of Indian stocks in May, recording outflows of ₹32,963 crore through 30 May. This has resulted in total FPI selling in the secondary market reaching ₹2.25 lakh crore ( ₹2,24,932 crore) so far this year. Conversely, FPIs have raised ₹15,497 crore through the primary market during the same period, indicating ongoing interest in certain capital-raising ventures.

Analysts also noted that the Indian rupee, which dipped from approximately 90 per US dollar at the beginning of the year to a low of 96.96, has recently started to recover, closing near 95 per dollar on 29 May.

Can Nifty 50 sustain above 23,500?

Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, said that the Nifty 50's technical setup has weakened after the index slipped below its key moving averages on Friday.

He noted that the Relative Strength Index (RSI) has dropped from 54 to 44, indicating increasing bearish momentum, while the ADX indicator shows DI- remaining above DI+, signalling stronger seller dominance.

However, Shah highlighted that this week's options data points to strong support at the 23,500 level, where put writers have built nearly twice as many positions as call writers. As long as this support is defended, the Nifty 50 is likely to hold above 23,500. On the upside, the 23,750–23,800 zone, coinciding with the 20-day EMA, is expected to act as immediate resistance.

Meanwhile, Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, observed that the Nifty 50 failed to sustain above the crucial 24,000 resistance level last week and has since drifted towards the lower end of its recent trading range near 23,500.

He noted that this support level aligns with a rising trendline on the daily chart, making it a key zone to watch. A decisive breach below 23,500 could trigger further downside pressure. However, Bhosale believes the index may remain in a consolidation phase at the start of the June derivatives series, with fresh positive momentum likely only if the Nifty 50 manages to reclaim and sustain above 24,000.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.