Mumbai: Indian shares lost steam after an early rally and pared gains to 0.3% on Monday as investors were reluctant to build positions ahead of the national budget on Friday.
Export-driven outsourcers led the rise on hopes for better order flow from the United States, their biggest market, as a surprise discount rate hike by the Federal Reserve last week indicated a recovery was underway.
Bellwether Infosys Technologies firmed 1.5%, while Tata Consultancy Services and Wipro gained 0.7% and 0.2% respectively.
“We started on a good note, helped by strong global cues. But then reality is that budget is around the corner and investors avoid taking big positions before that,” said Nilesh Doshi, president of equities at Techno Shares.
With the Indian economy picking up steam, winding down the fiscal stimulus may be the central theme in the federal budget.
The government has rolled out about Rs1.86 trillion ($40 billion) in tax concessions and a further $4 billion in new spending since 2008, but this has strained the deficit and borrowing.
“The budget comes at a critical time -- domestic demand is galloping ahead, inflationary pressures are building up, and both fiscal and monetary policies remain amongst the loosest,” Tushar Poddar, vice president and chief economist at Goldman Sachs India, said in a note.
The 30-share BSE index ended up 0.28%, or 45.42 points, to 16,237.05. It rose as much as 1.4% in early deals.
Eighteen of its components closed in the green.
Volume was low at around 271 million shares, compared with last week’s daily average of 331 million shares. In the broader market, there were two losers for every share than gained.
Reliance Industries gave up early gains and closed 0.5% lower at Rs978.90, on a media report the energy major has raised its offer for US-based petrochemicals maker LyondellBasell to about $14.5 billion.
Bharti Airtel shed 0.5% to Rs276.85 after a Kuwaiti newspaper reported the leading Indian mobile operator is expected to sign a letter of intent this week for its $9 billion plan to buy Zain’s African assets.
Separately, the Economic Times reported Bharti has lined up loans for the acquisition.
The 50-share NSE index gained 0.2% to 4,856.40.
Dealers said trade would be cautious this week ahead of the expiry of monthly derivatives contracts on the National Stock Exchange on Thursday and the coming budget.