Pre-Market Update: Sensex, Nifty 50 Likely to Open Cautious on June 4; Hero MotoCorp, BHEL, HCLTech

Pre-Market Update at 7:45 AM:

Indian stock market benchmark indices, Sensex and Nifty 50, are expected to open on a cautious note on Thursday, June 4, as investors closely monitor developments in the Middle East and assess their potential impact on global markets. While a ceasefire agreement between Israel and Lebanon has improved hopes of easing regional tensions, uncertainty surrounding the ongoing U.S.-Iran conflict continues to keep investors on edge.

Gift Nifty was trading around the 23,318 level, at a discount of nearly 16 points to the previous close of Nifty futures, indicating a muted start for domestic equities. Asian markets traded lower, while Wall Street ended sharply weaker overnight amid concerns that escalating geopolitical tensions could keep energy prices elevated and fuel inflationary pressures.

The Middle East remains the key trigger for global markets. Iran's Foreign Minister said recent negotiations aimed at ending the conflict had produced no tangible progress, while fresh military strikes by both the U.S. and Iran continued to test the fragile ceasefire environment. However, U.S. President Donald Trump struck an optimistic tone, suggesting that a diplomatic breakthrough could emerge over the weekend. Separately, Israel and Lebanon agreed to implement a ceasefire, although both sides stressed that a complete halt to hostilities by Iran-backed Hezbollah would be necessary for lasting peace.

Investor sentiment was also influenced by political developments in Washington. The U.S. House of Representatives passed a resolution seeking to limit President Trump's ability to undertake further military action against Iran without congressional approval. The measure was approved by a 215-208 vote, reflecting growing bipartisan concerns over the conflict. While the resolution still requires Senate approval and could face a presidential veto, it underscores increasing scrutiny of U.S. military involvement in the region.

Crude oil prices eased on hopes that diplomatic efforts could help reduce tensions. Brent crude declined 0.69 per cent to USD 97.14 per barrel, while West Texas Intermediate crude slipped 0.65 per cent to USD 95.40 per barrel. Despite the decline, oil prices remain elevated due to supply concerns and recent geopolitical developments. A larger-than-expected drawdown in U.S. crude inventories also pointed to tighter supply conditions, which could continue to support prices.

The U.S. Federal Reserve's Beige Book survey highlighted another concern for investors. While artificial intelligence-related investments continue to support economic activity, rising costs linked to the Iran conflict are adding to inflationary pressures. The survey noted higher inflation across most regions between late April and late May, with energy costs affecting sectors such as transportation, packaging, groceries and fertilisers.

Economic data from the U.S. remained supportive. The Institute for Supply Management reported that the non-manufacturing Purchasing Managers' Index rose to 54.5 in May from 53.6 in April, exceeding market expectations of 53.8 and indicating stronger growth in the services sector.

Institutional activity remained mixed. Foreign Institutional Investors (FIIs) were net sellers of Indian equities worth Rs 5,616.56 crore on June 3, while Domestic Institutional Investors (DIIs) remained supportive, purchasing shares worth Rs 5,740.89 crore.

In the commodities market, gold prices advanced as softer crude oil prices and a weaker U.S. dollar boosted safe-haven demand. Spot gold rose 0.4 per cent to USD 4,450.16 per ounce, while U.S. gold futures gained 0.2 per cent to USD 4,477 per ounce. The Dollar Index remained close to a two-month high at 99.47.

From a derivatives perspective, the Put-Call Ratio for the June expiry series stood at 0.98. Significant put open interest was concentrated at the 23,300 strike, suggesting immediate support. On the call side, higher open interest addition was observed at the 23,500 strike, while the highest open interest among out-of-the-money strikes was concentrated at 24,000, making it a key resistance zone.

Technically, Nifty 50 faces immediate resistance at 23,560, which coincides with the neckline of a potential double-bottom formation. A sustained move above this level could trigger an advance towards the 50-day moving average at 23,685 and the 20-day moving average at 23,737. On the downside, immediate support is seen at 23,230, followed by a stronger support zone near 23,100. A breach below these levels may revive selling pressure.

Several stocks are expected to remain in focus during Thursday's session. Hero MotoCorp launched its first flex-fuel motorcycles in the 100cc segment, including Splendor+ and HF Deluxe. Bharat Heavy Electricals Limited secured an overseas order worth Rs 2,000 crore-Rs 2,500 crore from a Nigerian client for eight gas turbine generator packages. HCLTech was recognised among Forbes' America's Best Employers for New Grads for the third consecutive year.

Other stocks to watch include Indiabulls, which plans to raise up to Rs 1,000 crore through warrant issuance; ideaForge Technology, which approved fundraising of up to Rs 500 crore; Karnataka Bank, which enabled EPF payment integration through internet banking; Oil and Natural Gas Corporation, where Anupam Agarwal was appointed Director (Finance); Tarsons Products, which completed a EUR 552,000 investment tranche in its subsidiary; AstraZeneca Pharma India, which surrendered its factory licence; and Lenskart following a large block deal involving SoftBank's stake sale.

In the futures and options segment, Amber Enterprises India and Kaynes Technologies remain under the F&O ban list for June 4.

On Wednesday, Indian equity benchmarks ended lower but recovered significantly from intraday lows. The Sensex declined 303.67 points, or 0.41 per cent, to close at 74,346.17, while the Nifty 50 fell 77.95 points, or 0.33 per cent, to settle at 23,405.60.

Wall Street also ended lower overnight as geopolitical concerns weighed on sentiment. The Dow Jones Industrial Average fell 620.72 points, or 1.21 per cent, to 50,687.07. The S&P 500 declined 56.06 points, or 0.74 per cent, to 7,553.72, while the Nasdaq Composite dropped 239.92 points, or 0.89 per cent, to 26,853.98.

Among major technology stocks, Nvidia fell 3.62 per cent, Microsoft declined 3.17 per cent, Amazon lost 2.53 per cent and Apple slipped 1.57 per cent. However, AMD gained 4.02 per cent and Meta Platforms advanced 4.24 per cent. IBM was among the biggest laggards, tumbling 7.17 per cent. Semiconductor stocks delivered mixed performances, with Marvell, Intel, Qualcomm and Sandisk posting gains ranging between 3.7 per cent and 6.7 per cent.

Overall, investors are expected to remain focused on geopolitical developments, crude oil prices, institutional flows and key stock-specific triggers as the market searches for direction in a volatile global environment.

Disclaimer: The article is for informational purposes only and not investment advice.