Indian benchmark indices have witnessed a sharp reversal in sentiments in the last few sessions, beginning last week, with the overall bias shifting from negative to positive for the June Series. The major trigger behind the rebound has been the US-Iran trade deal, resulting in the fall in the crude oil prices and recovery in the Indian rupee which ultimately eased the inflationary concerns.

From a short-term weekly perspective, signs of strengthening momentum had already emerged as Nifty managed to close above the 23,070–23,425 consolidation band, said Sahaj Agrawal, Head of Derivatives Research at Kotak Securities.

A key technical development on Thursday, was the breakout above the declining resistance trend-line connecting the recent swing highs of 24,480 and 24,090, which was positioned near 23,700. The strong gap-up opening, supported by optimism surrounding the US-Iran peace talks, decisively cleared this critical supply zone and reinforced the bullish undertone, he said.

The analysts believe that the long ratio has risen from 8 per cent to 12 per cent from a derivatives standpoint. On the options front, significant OI build-up is visible at the 23,800 Put and 24,000 Call strikes. That said, the 24,100–24,300 zone is likely to act as an immediate hurdle and may induce some consolidation or profit booking in the near term, he notes.

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FIIs segment has been on the selling side in the cash segment and remains to be seen if that stance changes. However, overseas investors turned net buyers on Monday, but the recent selling has been relentless lately, which exodus hitting Rs 62,850 crore mark in first half of June.

However, Agrawal believes that the broader setup remains constructive from both a weekly trend and June series perspective. Consequently, buying on dips and participating in momentum-based breakouts continue to be the preferred trading approaches.

To ride the volatility he has suggested an expiry day strategy for traders. He believes that sustained trading above 24,010 is expected to serve as a trigger for a fresh breakout for the expiry session and could open the door for further upside.

"On the downside, any corrective move towards the 23,700 zone would be viewed as an opportunity to accumulate long positions, particularly given the prevailing positive undertone. Similarly, an RSI oversold setup during intraday declines could offer attractive risk-reward entry opportunities for traders," Agrawal adds.