Indian equity market closed marginally lower on Thursday as the finance minister Nirmala Sitharaman presented the interim budget without any major announcements, ahead of the general elections this year.

The 30-share BSE benchmark Sensex fell 106 points or 0.15% to settle at 71,645. The broader NSE Nifty declined 28 points or 0.13% to end at 21,697.

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 government has set a target to narrow the fiscal deficit to 5.1% in the fiscal year 2024-25 and reduce its borrowings to below economists’ estimates.

The Indian government will borrow a gross of Rs 14.13 lakh crore in the fiscal year starting April 1, compared with Rs 15.43 lakh crore for the current fiscal, Finance Minister Nirmala Sitharaman said.Shares of fintech firm Paytm closed at the 20% lower circuit after the Reserve Bank of India (RBI) restricted Paytm Payments Bank from accepting fresh deposits and conducting credit transactions across its services due to supervisory concerns.Among the sectors, Nifty PSU Bank index was the top gainer, rising 3.1%, led by Punjab & Sind Bank, Indian Overseas Bank, PNB, and Canara Bank. On the other hand, Nifty Metal, Pharma, Realty, Healthcare, Consumer Durables, Media, and IT closed in the red.The market breadth was skewed in the favour of the bears. About 2,021 stocks declined, 1,819 gained, and 102 remained unchanged on the BSE.

Experts take

“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 FY25BE, is expected to improve the outlook on economic ratings. This led to a significant drop in India’s 10-year yield by 100bps to 7.04%, reflecting optimism due to lower-than-expected government borrowing,” said Vinod Nair, Head of Research at Geojit Financial Services.

Meanwhile, the US Fed’s decision to maintain rates without clear guidance on future cuts dampened market sentiments, Nair added.

Aditya Gaggar, Director of Progressive Shares, said, “A small bearish candle was formed on the daily chart but the undertone remains bullish with the downside protected at 21,630 which is 21DMA support while the immediate resistance is placed at 21,840.”

Fed keeps key rates unchanged

Following a two-day meeting of the Federal Open Market Committee (FOMC), the US Federal Reserve issued its interest rate decision on Wednesday, maintaining the benchmark interest rates at 5.25 to 5.5% for the fourth consecutive meeting, in line with Street predictions.

At a media conference, Fed Chair Jerome Powell flatly stated a cut as early as March seemed unlikely, but he also acknowledged that everyone on the committee was looking for a cut this year.

“Inflation is still too high. Ongoing progress in bringing it down is not assured,” Powell said after the Fed’s policy-setting committee kept the benchmark overnight interest rate in the 5.25%-5.50% range and announced that rate cuts would not be appropriate until there is “greater confidence that inflation is moving” towards the central bank’s 2% target.

10-year treasury yield falls below 4%

Treasuries rallied strongly as 10-year yields dived 12 basis points to 3.91% in the wake of the Fed decision. Some of those gains were then pared in Europe, nudging yields up to 3.94%.

Global markets tepid

Europe’s bourses started in the red as traders hoped euro zone inflation data and a Bank of England interest rate decision due later would divert attention from what had been Wall Street’s worst rout since September on Wednesday.

In Asian markets, Japan’s Nikkei eased 0.8% as the yen gained. South Korea bounced 1.8% following upbeat trade data and a survey showing factory activity grew for the first time in 19 months.

Crude watch

Oil prices rose, supported by signals from the US Federal Reserve on a possible start to rate cuts and on new support measures for China’s embattled property market.

Brent crude futures climbed 58 cents to $81.13 a barrel and US West Texas Intermediate crude futures gained 59 cents to $76.44, after falling by more than $2 a barrel in the previous session.

Rupee hits two-week high

The rupee reached a two-week high, aided by dollar sales by a UK-headquartered bank, while forward premiums were off their highs following the presentation of the budget earlier in the day.

The rupee ended at 82.9650 to the US dollar, up from 83.0425 in the previous session. The currency hit its highest intraday level of 82.9325 since Jan. 16.

(With inputs from agencies)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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