Markets turn choppy on Budget day; Sensex, Nifty settle lower

 Benchmark equity indices ended lower on the Budget day on Thursday as investors opted for profit-taking amid mixed cues.

After shedding early gains, the markets turned volatile during the presentation of the interim Budget, where in the capital expenditure outlay was marginally hiked but there were no major announcements.

The 30-share BSE Sensex declined 106.81 points or 0.15 per cent to settle at 71,645.30. During the day, it gyrated between a high of 72,151.02 and a low of 71,574.89.

The Nifty dipped 28.25 points or 0.13 per cent to 21,697.45. It oscillated between the day's high of 21,832.95 and a low of 21,658.75.

Market sentiments were also dampened after the US Federal Reserve indicated it likely won't cut interest rates in March.

Finance Minister Nirmala Sitharaman on Thursday hiked capital expenditure by 11 per cent for the next fiscal to sustain world-beating economic growth rate while trimming the deficit in a reform-oriented interim Budget that also gave relief to common man from disputed small tax demands of up to Rs 25,000.

Presenting a vote on account or an interim Budget for 2024-25, Sitharaman proposed no changes in income tax rates for individuals and corporates, as well as customs duty.

In less than an hour-long budget speech, she presented the Modi government's achievements in the last 10 years that transformed India from being a 'fragile' economy to the world's fastest-growing major economy.

She hiked capital expenditure to Rs 11.11 lakh crore for 2024-25 while trimming the fiscal deficit for this financial year to 5.8 per cent, from the budgeted 5.9 per cent of GDP, and further lowering to 5.1 per cent in the next fiscal.

"The domestic market was marginally disappointed by lower-than-expected infra spending in the interim Budget. However, the government's commitment to fiscal prudence, targeting a fiscal deficit of 5.1% for FY25, is expected to improve the outlook on economic ratings," said Vinod Nair, Head of Research, Geojit Financial Services.

Meanwhile, the US FED's decision to maintain rates without clear guidance on future cuts dampened market sentiments, he added.

"Equity indices lost all their early gains during the presentation of the interim Budget today to end in the red. Historically the markets don’t react too much to interim Budgets and that pattern was maintained this time as well. The elections in the upcoming months will be a bigger market mover," said Avdhut Bagkar Technical and Derivatives Analyst, StoxBox.

Among the Sensex firms, Larsen & Toubro, UltraTech Cement, JSW Steel, Titan, Bajaj Finance, Wipro, Tech Mahindra and Nestle were the major laggards.

Maruti, Power Grid, Axis Bank, State Bank of India, NTPC, HDFC Bank, ITC and IndusInd Bank were the gainers.

"In a short budget speech, usual for an interim budget immediately preceding general elections, the FM largely traversed on a sustained development trajectory. The Budget is largely non-populist, given that there is barely any change in Budgeted subsidies for FY25, uncharacteristic of an interim Budget ahead of the national elections.

"The policy intent was crystal clear as seen through the selective allocation of resources, with stronger emphasis on sectors of rural and middle-class housing and Green Energy," said Amar Ambani, Executive Director, YES Securities.

Clearly, the biggest plus for the market was the aggressive fiscal deficit target of 5.1 per cent for FY25 versus the expectation of 5.5 per cent, he added.

Goods and Services Tax collections jumped 10.4 per cent to over Rs 1.72 lakh crore in January, reflecting buoyant economic activity and setting the stage for the next phase of GST reforms.

In Asian markets, Seoul and Hong Kong settled in the green while Tokyo and Shanghai ended lower.

European markets were trading on a mixed note. The US markets ended sharply lower on Wednesday.

The US Fed on Wednesday left its main interest rate steady and made clear it “does not expect it will be appropriate” to cut rates “until it has gained greater confidence that inflation is moving sustainably towards” its goal of 2 per cent.

"It is noteworthy is that this is a budget entirely focused on fiscal consolidation and not populism, which was expected to be in focus because of the upcoming general elections," Sahil Kapoor, Head - Products and Market Strategist at DSP Mutual Fund, said on Budget.

Global oil benchmark Brent crude climbed 0.66 per cent to $81.08 a barrel.

Foreign Institutional Investors (FIIs) bought equities worth Rs 1,660.72 crore on Wednesday, according to exchange data.

The BSE benchmark jumped 612.21 points or 0.86 per cent to settle at 71,752.11 on Wednesday. The Nifty climbed 203.60 points or 0.95 per cent to 21,725.70.

Rupee gains 8 paise agaisnt $

 The rupee appreciated by 8 paise to close at 82.96 against the US dollar on Thursday after the government hinted at faster fiscal consolidation and lower borrowings in its interim Budget for 2024-25.

However, a strong greenback against major rivals overseas and subdued domestic equity markets restricted the sharp gain in the domestic unit, forex traders said.

Finance Minister Nirmala Sitharaman on Thursday hiked capital expenditure by 11 per cent for the next fiscal to sustain a world-beating economic growth rate while trimming the deficit in a reform-oriented interim budget

At the interbank foreign exchange, the rupee opened at 83.02 against the dollar. During the session, the local unit touched a high of 82.93 and a low of 83.03.

Continuing on the fiscally prudent path, the Modi government in the interim Budget refrained from announcing populist measures, which will help it trim the fiscal deficit to 5.1 per cent of the GDP next fiscal and 4.5 per cent in FY26.

The interim Budget has prioritised pragmatism over populism by focusing on higher capex and faster fiscal consolidation. The math not only projects a better-than-budgeted deficit target for FY24 but also pegs the FY25 goalpost at a narrower 5.1 per cent against expectations of 5.3-5.4 per cent, Radhika Rao, senior economist at DBS Bank, said.

The rupee finally settled at 82.96 against the US dollar, registering a gain of 8 paise over its previous close.

On Wednesday, the rupee appreciated 6 paise to 83.04 against the US dollar.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.45 per cent higher at 103.55.

Brent crude futures, the global oil benchmark, climbed 0.66 per cent to $81.08 a barrel. 

Brent crude up 

 Crude oil futures on Thursday declined 0.1 per cent to Rs 6,307 per barrel as participants trimmed their positions on low demand.

On the Multi Commodity Exchange, crude oil for February delivery fell Rs 6 or 0.1 per cent to Rs 6,307 per barrel with a business volume of 8,456 lots.

Globally, West Texas Intermediate crude oil traded 0.07 per cent higher at  $75.90 per barrel, while Brent crude climbed 0.66 per cent to $81.08 a barrel. .