Sensex, Nifty close lower after budget as US Fed, high valuations weigh

By Reuters

  • 01 Feb 2024

Indian shares closed marginally lower on Thursday after the country's finance minister presented the interim budget without any major announcements as expected, as concerns over U.S. rate cuts and high valuations weighed on markets.

The NSE Nifty 50 index ended down 0.13% to 21,697.45, while the S&P BSE Sensex settled 0.15% lower at 71,645.30.

Both indexes were up about 0.3% ahead of the budget.

Finance Minister Nirmala Sitharaman promised economic reforms to drive growth in her budget speech, which was largely expected to avoid significant spending on new welfare programmes ahead of the election.

The Indian government's commitment to keep a tight lid on subsidies augur well for domestic equities, said Union Asset Management Company CEO Pradeepkumar.

While equities could consolidate over the next few months due to a likely delay in U.S. rate cuts and on expensive valuations, the overall outlook for Indian markets remains positive, three analysts said.

The U.S. Federal Reserve held interest rates steady on Wednesday but signalled that rate cuts would not be appropriate until inflation cools further.

Public sector banks gained 3.11%, helped by the government's adherence to fiscal prudence and relatively attractive valuations.

Auto stocks rose 0.53%, supported by strong monthly sales data.

Shares of fintech firm Paytm tanked 20% after the Reserve Bank of India restricted Paytm Payments Bank from accepting fresh deposits and conducting credit transactions due to supervisory concerns.

While the benchmarks were muted, sectors like fisheries, railway, housing finance, electric vehicles, clean energy jumped on key budgetary announcements, while realty and infrastructure stocks fell on modest hike in infrastructure allocations.

The more-domestically focussed mid-caps dropped 0.56% while small-caps rose 0.63%, with several analysts flagging expensive valuations.