Indian shares muted as budget tax relief offsets capex concerns

Indian shares ended little changed on Saturday as investors were whipsawed by a smaller-than-expected hike in government capital expenditure and plans to boost consumption by cutting personal taxes.

The Nifty 50 (.NSEI) was down 0.11 per cent at 23,482.15 points in the special session for the annual federal budget, while the BSE Sensex (.BSESN) closed 0.01 per cent higher at 77,505.96.

The benchmarks swung between modest gains and losses through the day as investors assessed various measures announced by Finance Minister Nirmala Sitharaman.

Sitharaman set India's capex outlay at 11.2 trillion rupees (about $130 billion) for 2025-26, a modest increase from 2024-25, which several analysts termed as a marginal negative for markets.

That put pressure on industrial and infrastructure firms. Larsen & Toubro (LART.NS), opens new tab, PNC Infra (PNCI.NS) and NBCC (NBCC.NS) dropped 3.3 per cent-5.1 per cent. L&T was among the top three Nifty losers.

"Clearly the measures taken to boost consumption have left little headroom with the government for capex allocation," said Gaurav Dua, senior vice president of capital markets strategy at Mirae Asset Sharekhan.

"Hence, it is not surprising that the capital goods, engineering and infrastructure companies sulked post the budget."

The government's plans to cut personal tax rates, however, came as a relief for a country struggling with slowing consumption.

Consumption-linked sectors such as fast-moving consumer goods (.NIFTYFMCG) rose 3.0 per cent, while auto (.NIFTYAUTO) and realty (.NIFTYREAL) gained 2.0 per cent and 3.4 per cent, respectively.

The more domestically focused mid-caps (.NIFMDCP100), opens new tab shed 0.4 per cent and small-caps (.NIFSMCP100) closed 0.4 per cent higher.

Analysts said the budget broadly met investors' expectations, giving investors the leeway to take a pause after gaining about 3.0 per cent in the last four sessions in the run-up to the budget.

Among other stocks, food delivery companies Zomato (ZOMT.NS) and Swiggy (SWIG.NS) jumped 7.3 per cent and 4.7 per cent, while restaurant operators Sapphire Foods (SAPI.NS), Restaurants Brands Asia (RESR.NS), Jubilant Foodworks (JUBI.NS), Devyani International (DEVY.NS) climbed 2.6 per cent-6.5 per cent.

Footwear makers rose on plans to support the leather industry, while tourism-linked companies gained on proposals to develop top destinations with key infrastructure.

Meanwhile, insurance companies fell as analysts said the new tax benefits for consumers could take the shine off some insurance products that sell tax-saving incentives.