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Indian Shares Dip As Markets Weigh Federal Budget, Await More Details

The broader NSE Nifty was down 0.17% at 11,926.80 points, while the benchmark BSE Sensex was 0.10% lower at 39,861.56.

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Indian shares gave up early gains and slipped lower by midday on Friday as Finance Minister Nirmala Sitharaman announced plans to boost infrastructure and foreign investment in the new government's first budget since winning a second term.

Trading was cautious, however, as investors waited to see details of the government's spending plans, any proposals for tax cuts and whether it will raise its fiscal deficit target.

The broader NSE Nifty was down 0.17% at 11,926.80 points by 0704 GMT, while the benchmark BSE Sensex was 0.10% lower at 39,861.56.

Sitharaman, presenting the annual budget statement to parliament, said the government planned structural reforms to kickstart foreign and domestic investment.

But investors were largely unimpressed.

"This budget is not very different from the interim budget (in February) even as market participants await fiscal deficit proposals," said Deepak Jasani, Head of Retail Research at HDFC Securities.    

"Trade will be fluctuating. Till the fiscal deficit proposals are heard, one should not jump to conclusions."

Six of the 11 sectoral indexes compiled by the NSE were in the red, with the Nifty Metal index among the top drags, falling as much 1.6% while 13 of the 19 sectoral indexes compiled by BSE were trading lower.

The government said on Thursday it expects economic growth could get back up to 7% this year, but cautioned it will face challenges as Prime Minister Narendra Modi's government struggles with a sluggish economy.

Sithraman said on Friday India would become a $3 trillion economy in the current fiscal year, and a $5 trillion economy in the next few years, though some analysts said the latter target will be a tall order.

The 10-year benchmark government bond yield fell to 6.60%, compared with 6.75% before the budget.

The rupee strengthened to 68.59 from 68.70.

Meanwhile, broader Asian markets kept their gains on hopes of a possible rate cut by the U.S. Federal Reserve as soon as this month.

The MSCI's broadest index of Asia-Pacific shares outside Japan inched up to levels not seen since early May.

In India, Oil And Natural Gas Ltd and UPL Ltd were among the top losers on the NSE Nifty. ONGC slid 3.2%, while UPL shares fell 2.5%.

The country's IT index was down 0.8%, with shares of Tata Consultancy Services Ltd falling 2.25%. The IT services firm is due to post first quarter results next week.


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