BENGALURU, Feb 1 (Reuters) - Indian shares gave up early gains to trade mostly flat on Thursday as the country's finance minister presented the interim budget without any major announcements, as expected, ahead of the country's general elections this year.
The NSE Nifty 50 index and the S&P BSE Sensex were mostly unchanged as of 12:26 p.m. IST. They 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 country has set a target to narrow its fiscal deficit to 5.1% in the fiscal year 2024/25 and reduce its borrowings below economists' estimate.
Sitharaman said India will borrow a gross 14.13 trillion rupees ($170.36 bln) in fiscal 2025, lower than the economists' estimate of 15.6 trillion rupees.
The expectations were subdued due to the interim budget, Pankaj Murarka, chief investment officer at Renaissance Investment Managers said, adding that markets might consolidate in the next three months following Fed commentary, leading up to the elections.
The government's sustained focus on fiscal prudence is not only positive for economy, but also for the markets, Murarka 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, which weighed on global equities.
Among the sectors, auto stocks were the top gainers, rising 1% as companies reported sales data for January.
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 across its services due to supervisory concerns.
Fisheries stocks surged as the government doubled the export target in the budget, while power stocks advanced as the budget proposed providing free electricity via solar rooftops to 10 million households.
Reporting by Sethuraman NR and Bharath Rajeswaran in Bengaluru; Editing by Sonia Cheema, Eileen Soreng, Sohini Goswami and Dhanya Ann Thoppil
Source: Reuters