Benchmark indices Nifty and Sensex are muted in early trade with broader market indices outperforming, as investors adjust to the changes in taxation in the capital market a day after the Union Budget.
At opening, the Sensex was down 0.16 percent at 80,303 and the Nifty was down 0.15 percent at 24,442. About 1,532 shares advanced, 691 shares declined, and 128 shares unchanged.
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"The increase in capital gains was a sheer surprise but the Finance Minister is trying to bring some uniformity in incentives. There may be some knee-jerk reactions but the overall sentiment is bullish as equity remains one of the most attractive assets," Kranthi Bathini, director of equity strategy at WealthMills Securities told Moneycontrol.
Bathini added that the overall budget is encouraging with emphasis on rural consumption. The impetus to manufacturing and MSMEs too bodes well. The government has allocated Rs 2.66 lakh crore for rural development, including spending on rural infrastructure.
Experts attribute a strong liquidity to be outweighing concerns about high valuations. Retail inflow has been robust, driven by direct equity investments, mutual funds, portfolio management services (PMS), and alternative investment funds (AIFs).
The broader market indices outperformed the headline indices to trade 0.2 and 0.5 percent higher, respectively. The two have nearly rallied 22 percent each since the start of the year.
India VIX, also known as the fear gauge remained muted around 13.
Among sectoral indices, FMCG was the top gainer after FM Sitharaman announced schemes to boost employment in the Budget, as higher income is expected to raise demand for staples. "The government has five schemes to facilitate employment and skilling for 4.1 crore youth Central outlay of Rs 2 lakh crore," Kranthi Bathini said.
FMCG bellwether Hindustan Unilever was buzzing in trade as most brokerages turned positive on India's largest consumer staples player.
Laggards include the realty and metal index with the realty being the worst hit, dragged by DLF and Godrej Properties.
From a technical standpoint, "Nifty can find support at 24,400 followed by 24,350 and 24,300. On the higher side, 24,550 can be immediate resistance, followed by 24,650 and 24,700, Deven Mehata, research analyst at Choice Borking said.
The charts of Bank Nifty indicate that it may get support at 51,600, followed by 51,500 and 51,300. If the index advances further, 52,000 would be the initial key resistance, followed by 52,200 and 52,500.
ITC, Titan Company, HDFC Life, Tata Motors, and Wipro were the top Nifty gainers. Tata Consumer Products, HUL, Bajaj Finance, Nestle India, and Britannia Industries were the major laggards.
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