Mumbai: Indian shares extended gains to more than 1% on Friday afternoon, as finance minister said the fiscal deficit for 2010/11 was seen at 5.5%, lower than 6.9% for 2009/10.
At 12:15pm, the 30-share BSE index was up 1.35% at 16,473.55 points, with 27 components advancing. The 50-share NSE index was up 1.6% at 4,936.55.
Markets were trading 0.3% higher on Friday, tracking strong Asian markets, but all eyes were on the national budget scheduled for release at 11:00am.
The budget comes against the backdrop of a rebounding economy, which should allow the finance minister Pranab Mukherjee to start rolling back stimulus measures and focus on fiscal consolidation.
“All the noises so far hint the stimulus withdrawal will not come as a shock. It will rather be a gradual approach,” said Jigar Shah, vice-president of equity sales at Motilal Oswal.
“I think they will not talk of too many things at the same time, but take up few issues and concentrate on them. We will see what kind of reforms they announce.”
Gross domestic product data for the December quarter is also due around the same time as the budget, and a Reuters poll showed the economy probably grew an annual 6.8%.
By 10:20am, the 30-share BSE Index was trading up 0.33% at 16,307.06, with 21 of its components in the green. The 50-share NSE index was up 0.4% at 4,877.75.
Banks and automobile companies were mixed.
Top lender State Bank of India and private lender HDFC Bank were up 1.2% and 0.7% respectively. Rival ICICI Bank edged 0.5% lower.
Top vehicle maker Tata Motors climbed 1.2% ahead of its consolidated third-quarter result due around 3:00pm. After market hours on Thursday, the company said its Jaguar Land Rover unit had received a 340 million pound loan from the European Investment Bank.
Tractor and utility vehicle maker Mahindra and Mahindra rose 0.8%, but leading car maker Maruti Suzuki slid 1.2%.
Drug maker Ranbaxy Laboratories fell 6.6% to Rs424.25 as analysts said its 2010 guidance fell short of expectations.
“CY10 guidance is lower than we expected and is probably conservative,” Citigroup analysts Prashant Nair and Akshay Rai said in a note.
Ranbaxy, which is 64% owned by Japan’s Daiichi Sankyo, forecast a rise of 48% in net profit in 2010 to 4.6 billion rupees and a growth of 6% in sales to 78 billion.
In the broader market, gainers led losers in a ratio of 1.5:1 on volume of 42 million shares.