Nifty: Sellers dominate below 20-DEMA despite oversold derivatives setup
Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities
Mumbai, 1 June 2026: Nifty remained under pressure and closed at 23,378.70, down 169.05 points (-0.72%), as sustained selling near the falling 20-DEMA (23,766) continued to weigh on sentiment.
Derivatives Analysis Report
Nifty extends correction
The index slipped towards the crucial 23,350–23,300 support zone, indicating that sellers remain in control of the short-term trend. The inability to sustain above the 20-DEMA despite multiple recovery attempts reflects persistent supply at higher levels and a cautious undertone in the market.
Momentum indicators continue to weaken, with the daily RSI slipping to 40.27, remaining below its signal line near 45.75, which suggests fading buying strength. However, with the lower timeframe RSI approaching oversold territory and the index trading near an important support cluster, a short-covering bounce or temporary profit booking by bears cannot be ruled out. India VIX rose 1.87% to 16.49, indicating a modest increase in hedging activity, though volatility still remains far from panic levels.
From a derivatives perspective, the setup remains cautious. The PCR stands at 0.49, highlighting an oversold derivatives structure and heavy call-dominated positioning. Significant call open interest is concentrated in the 23,500–23,600 strike zone, creating a strong resistance band, while Put writers continue to defend the 23,000–23,200 region, establishing an important support base. The Max Pain level is placed near 23,500.
Technically, 23,500–23,600 remains the immediate resistance zone, followed by the key hurdle near 23,750–23,800 (20-DEMA). On the downside, 23,300–23,250 remains a critical support area, below which the index could drift towards 23,116. While the derivatives setup appears stretched on the downside, the broader sentiment remains cautious, and only a decisive move beyond the current range is likely to determine the next meaningful trend for the index.
Nifty Bank faces fresh weakness
The Nifty Bank index extended its weakness for the second consecutive session, closing at 53,643.10, down 596 points (-1.10%). On the daily chart, the index slipped below its 20-DEMA (54,432) and breached the lower end of its recent consolidation range, indicating that sellers have regained control in the short term.
Technically, the index continues to form a sequence of lower highs and lower lows, keeping the near-term bias negative. The immediate support is placed in the 53,300–53,000 zone, where Put writers have built meaningful positions. A breach below this region could trigger further downsides toward 51,915, followed by 50,666. On the upside, the breakdown zone of 54,300–54,500 is likely to act as a strong resistance, and only a sustained move above this region can revive bullish momentum.
Momentum indicators remained subdued, with the RSI at 43.02, trading below the neutral 50 mark and signaling weakening buying strength.
From the derivatives front, option data suggests a cautious undertone. Significant call writing is visible at 54,000 and 54,500 strikes, highlighting strong overhead resistance, while Put writers are actively defending the 53,000 and 53,500 strikes. PCR stands at 0.85, indicating a cautious-to-bearish undertone in the derivatives market.
As long as the index trades below 54,500, a sell-on-rise approach remains favorable. A decisive move below 53,300 may intensify selling pressure, while a close above 54,500 could trigger short-covering and improve sentiment.
Technical Analysis Report
Nifty Slides toward Previous Swing Low; VIX Hammer Signals Caution
Om Mehra, Technical Research Analyst, SAMCO Securities
Nifty settled at 23,382.60, down 0.70%, with the index now approaching the previous swing low at 23,262.55, which remains the most critical support level on the daily chart. Nifty is drifting toward the lower Bollinger Band, highlighting increasing downside pressure, as the recent up-move has been completely negated over the past few sessions.
The MACD has turned negative and remains below the zero line. The RSI has dropped to 40, moving closer to the oversold zone.
On the hourly chart, the index has broken below the 23,600–23,700 consolidation zone and is forming an inverted saucer pattern.
India VIX rose 2.21% to settle at 16.54, forming a hammer candle on its daily chart after dipping to 13.91 during the session. The hammer formation on VIX suggests volatility may rise further, potentially leading to wider swings in the coming sessions.
On the downside, 23,260 remains the immediate support level. A decisive breach of this level could accelerate the decline toward the 23,150–23,080 zone. On the upside, the 23,550–23,650 zone is likely to act as immediate resistance. The near-term outlook remains cautious.
Nifty Bank declined 1.10% to close at 53,643.10. The index formed a bearish candle on the daily chart and continues to trade below all key short-term moving averages.
On the hourly chart, a clear sequence of lower highs is emerging, while the pace of the decline has remained steady, indicating sustained selling pressure.
The RSI has declined to 43, slipping below the neutral zone. The MACD, although still marginally positive, has started to flatten rapidly and may slip into negative territory in the coming sessions.
On the downside, the 53,300–53,200 zone remains the immediate support, followed by the critical swing low at 52,800. On the upside, the 54,000–54,300 zone, which is aligned with the 20-day SMA, remains the immediate resistance. The near-term outlook remains cautious unless the index reclaims this resistance zone.
