Key indices edge up ahead of Budget

Mumbai: Equity benchmarks ended with marginal gains on Tuesday as investors kept their powder dry ahead of the Union Budget presentation and the US Federal Reserve's interest rate decision. Fag-end buying helped the 30-share BSE benchmark Sensex settle with a gain of 49.49 points or 0.08 per cent at 59,549.90. During the day, it hit a high of 59,787.63 and a low of 59,104.59. The broader NSE Nifty inched up 13.20 points or 0.07 per cent to close at 17,662.15.

Mahindra & Mahindra topped the Sensex gainers' chart with a jump of 3.53 per cent, followed by UltraTech Cement, Power Grid, SBI, ITC, Tata Motors, Titan and NTPC. On the other hand, Tata Consultancy Services, Bajaj Finance, Tech Mahindra, Sun Pharma, Asian Paints, HCL Tech and HDFC were among the major laggards.

"The Indian market has been underperforming compared to the rest of the world because it has been trading at premium valuations, which are in contrast to the moderation forecast in the domestic economy for FY24. The premiumisation has tapered, currently trading in-line with developed markets like the US; however, we continue to trade at a premium to other emerging markets. The Adani saga has prolonged the correction as FII selling has increased. Now, the focus is on the outcome of the Budget and Fed policy, on which the market has a mixed view," said Vinod Nair, head (research) at Geojit Financial Services.

"Now all eyes are on the Union Budget and we expect volatility to remain high on Wednesday. The last two days of pause in the index indicate a breather after the breakdown, but the overall tone is still bearish," said Ajit Mishra, V-P (technical research), Religare Broking Ltd. Foreign Institutional Investors (FIIs) offloaded shares worth a net Rs 6,792.80 crore on Monday, according to exchange data. In the broader markets, the BSE midcap and smallcap indices climbed as much as 2.21 per cent. World markets were on the backfoot ahead of the US Federal Reserve's monetary policy decision. Investors widely expect the Fed to raise rates by 25 basis points to rein in inflation. The pre-Budget Economic Survey, tabled in Parliament on Tuesday, said India's economic growth is projected to slow to 6 - 6.8 per cent in the next fiscal, from an estimated 7 per cent in FY23, but the country will remain the fastest growing major economy in the world as it fared better in dealing with the extraordinary set of challenges the globe has faced. While it indicated that inflation may not be too worrisome, borrowing costs are likely to remain 'higher for longer' as an entrenched inflation may prolong the tightening cycle. India's recovery from the pandemic was relatively quick, growth to be supported by solid domestic demand, pick up in capital investment, the Survey said but highlighted the challenge to rupee with the likelihood of further interest rate hikes by the US Fed. Current account deficit or CAD may continue to widen as global commodity prices remain elevated. If CAD widens further, the rupee may come under depreciation pressure, it said, adding the overall external situation will remain manageable.