Sensex, Nifty eye strong open after two-day slide; Key levels to track on June 3

The India VIX, a gauge of expected market volatility, snapped a three-day losing streak with a sharp 6.72 percent jump, climbing to 17.16.

Benchmark indices Nifty and Sensex are set for a strong start on June 3, snapping a two-day losing streak, as GIFT Nifty signals a 100-point gap-up open around the 24,850 mark. The two are up by over 4 percent year-to-date.

In the previous session, Indian equities slipped back into the red, ending marginally lower after a brief recovery, as selling pressure resurfaced in the final stretch. Weakness in IT, metal, pharma, and oil & gas stocks weighed on sentiment, even as broader market resilience stood out, with mid and smallcaps reversing early losses to end firmly in the green.

Foreign Institutional Investors (FIIs) net sold equities worth Rs 2,590 crore on June 2, and Domestic Institutional Investors (DIIs) continued providing support to the capital market with a net purchase of Rs 5,314 crore. For the year so far, FIIs have been net sellers of shares worth Rs 1,24,003 crore, while DIIs have net bought Rs 2,80,579 crore worth of shares.

Here are the key levels to watch out for in today's trade. 

Nifty continues to hover in a narrow band between 24,500 and 25,000, indicating a phase of consolidation. Despite a gap-down start on Monday, it managed to close above its 20-day EMA, showing some buying interest at lower levels. However, the RSI’s negative divergence and bearish crossover reflect weak momentum. Immediate support is placed at 23,630, where its 20-day EMA is placed, while positional support lies at 24,500–24,550. Resistance levels are marked at 24,860 and 25,070. The trend remains sideways with a slight negative bias unless a range breakout occurs.

"The index extended gains for the fourth session in a row on Monday ahead of the RBI monetary policy outcome on Friday. It has formed a small bull candle with a higher high and higher low, signalling consolidation with positive bias. The index is currently placed at the upper band of the last 5 weeks' consolidation range, placed around 55,800-56,000 levels," Bajaj Broking Research said. "Going ahead, a move and a close above 56,000 levels will signal acceleration of the up move towards 56,700 levels in the coming sessions. Bias remains positive dips should be used as a buying opportunity with immediate support placed at 55,000-55,200 levels while the key short-term support is seen at 54,000-53,500 being the confluence of key retracement and 50 days EMA and the lower band of the last 5 weeks' consolidation range," he added.

The Nifty Put-Call ratio (PCR), which indicates the mood of the market, rose to 0.82 on June 2, from 0.77 in the previous session. The increasing PCR, or being higher than 0.7 or surpassing 1, means traders are selling more Put options than Call options, which generally indicates the firming up of a bullish sentiment in the market. If the ratio falls below 0.7 or moves towards 0.5, then it indicates selling in Calls is higher than selling in Puts, reflecting a bearish mood in the market.

The India VIX, which measures expected market volatility, rebounded sharply after a three-day decline, rising 6.72 percent to 17.16 levels—signalling caution for the bulls.