Trade Setup for June 5: Nifty bulls aim for a breakout from its narrowest trading range in 17 sessions

The Nifty closed below its 20-day EMA for the second consecutive session on Wednesday. However, it managed to hold above the previous swing low of 24,462, registered on May 22, 2025.

After a sharp decline from the day's high on Tuesday, the Nifty witnessed a modest bounce on Wednesday. Buying momentum picked up towards the end of the session, helping the index close at the day's high.

Eventually, the Nifty ended 78 points higher at 24,620, amidst a largely range-bound trading day.

Eternal, Jio Financial, and IndusInd Bank were among the top gainers on the Nifty, while Bajaj Finserv, Trent, and Eicher Motors led the losses.

The broader markets continued to outperform the Sensex and Nifty. The Nifty Midcap 100 index rose 0.71%, while the Nifty Smallcap 100 index gained 0.79%.

Barring the Nifty Realty index, all other sectoral indices ended in the green, indicating broad-based buying interest. Notably, the Nifty Oil & Gas, Metals, and IT indices were among the top performers.

Quick-service restaurant (QSR) stocks saw moves, Swiggy surged 9%, and Eternal gained more than 3%. The rally followed a report that Zepto had postponed its IPO to 2026. However, Zepto sources later clarified that the company still plans to file its draft red herring prospectus (DRHP) with SEBI in 2025.

HDFC Bank shares closed 1% higher after SEBI approved the ₹12,500 crore IPO of its subsidiary, HDB Financial Services.

Foreign institutional investors (FIIs) ended May 2025 with net inflows of ₹11,773 crore, the highest monthly buying since September 2024. However, they have turned net sellers over the last two sessions, with outflows exceeding ₹5,000 crore on June 3.

Meanwhile, domestic institutional investor (DII) activity continues to support the market, led by large block deals worth ₹3,480 crore executed today.

Siddhartha Khemka of Motilal Oswal expects the market to remain in consolidation mode, tracking global trends and macroeconomic cues. Stock-specific action is likely to continue, driven by sectoral developments.

“The underlying trend of the Nifty remains choppy,” said Nagaraj Shetti of HDFC Securities. “A move above the 24,850 hurdle could reignite bullish sentiment, while immediate support is seen at 24,500.”

Rupak De of LKP Securities believes the market may remain sideways until Friday’s announcements and follow-up commentary.

“A bearish crossover in the RSI momentum oscillator signals weakening price strength, suggesting limited upside in the near term. A break below 24,500 could lead to further weakness, while resistance lies at 24,750–24,900,” he said.

Nandish Shah of HDFC Securities added, “On the upside, the swing high of 24,845 will act as resistance, while the 24,500 level is expected to offer strong support.”

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