File photo Photograph:( Reuters )
In early trade shares slipped in reaction to an overnight shakeout in global markets on growing concerns about the economic impact of the coronavirus outbreak in China, but the focus is set to shift to the domestic budget.
Indian shares got off to a choppy start in a special trading session on Saturday ahead of the annual Budget with finance minister Nirmala Sitharaman expected to unveil a raft of measures to revive a sagging economy.
In early trade shares slipped in reaction to an overnight shakeout in global markets on growing concerns about the economic impact of the coronavirus outbreak in China, but the focus is set to shift to the domestic Budget.
"We opened negative in the aftermath of the correction in the US market due to concerns over the China virus," said A.K Prabhakar, head of research at IDBI Capital.
"But from here on, the domestic market might recover ahead of the budget since we have seen significant correction over the past few days and on good results from SBI and Hindustan Unilever."
With growth in Asia's third-largest economy languishing at its lowest in a decade, the government is likely to increase spending on infrastructure and offer some tax incentives in its 2020-2021 Budget.
The government estimates that economic growth in the year ending March 31 will slip to 5 per cent, the weakest pace since the global financial crisis of 2008-09. Growth is expected to recover to 6 per cent-6.5 per cent in the following year.
The Nifty and the benchmark Sensex were trading largely flat by 0426 GMT after falling as much as 0.7 per cent each in early trade.
Mid-cap and small-cap shares, which were under pressure last year, have outperformed bluechip stocks in January in the run-up to the budget.
The Nifty 50 fell to 1.7 per cent in January, while the Sensex slipped 1.3 per cent. However, the Nifty Midcap 50 Index climbed 4.6 per cent.
The blue-chip indexes have rallied over 12 per cent last year, riding on a large corporate tax cut from the government in September aimed at boosting the economy. The rupee was 2.3 per cent weaker in 2019.
Shares of roadbuilders Sadbhav Engineering Ltd and IRB Infrastructure Developers Ltd surged 20-43 per cent in January as investors bet on increased spending by the government in infrastructure.
Financial stocks were the biggest drag on Saturday, with private sector lenders HDFC Bank Ltd and Kotak Mahindra Bank Ltd slipping around 2 per cent each.
Power Grid Corporation of India Ltd was the biggest loser on the Nifty 50, falling as much as 5.3 per cent to a near one-year low.
Consumer products giant Hindustan Unilever Ltd topped gains with a 2.6 per cent jump after posting a rise in quarterly profit on Friday.