Indian Shares Pare Early Gains; Capital Goods Stocks Surge

The benchmark BSE index was up 0.08 percent at 29,384.61 after gaining as much as 0.73 percent.

Published: 02nd March 2015 04:20 PM  |   Last Updated: 02nd March 2015 04:20 PM   |  A+A-


MUMBAI: Indian shares were trading flat on Monday as advances in capital goods stocks on positive proposals in the federal budget and gains in banks were offset by declines in heavyweights such as ITC Ltd.

India will increase investment in infrastructure by 700 billion rupees ($11.35 billion) in the fiscal year 2015-16, Finance Minister Arun Jaitley said on Saturday, when presenting the government's full-year budget.

Adding to the concerns, a private survey showed manufacturing activity expanded at its slowest pace in five months in February. The HSBC Manufacturing Purchasing Managers' Index, compiled by Markit, fell for the second consecutive month, to 51.2 in February from 52.9 in January.

Ratings agency Standard & Poor's does not expect an upgrade to India's sovereign debt rating in the next year in the absence of substantial, quality reforms, it said on Monday, days after the government's budget slowed the pace of fiscal consolidation.

"The outlook is positive, but we are waiting for a consolidation before initiating a fresh buy as market has spiked up before the budget," said Suresh Parmar, head of institutional equities at KJMC Capital Markets.

The benchmark BSE index was up 0.08 percent at 29,384.61 after gaining as much as 0.73 percent.

The broader NSE index was 0.49 percent higher at 8,946.40. It gained as much as 0.79 percent.

Capital goods stocks rose after the proposal to reduce corporate tax rate in budget helped spur gains in capital goods companies. Larsen and Toubro advanced 4.2 percent, while Bharat Heavy Electricals Ltd added 4.4 percent.

Axis Bank Ltd surged 5 percent, while HDFC Bank Ltd gained 1.2 percent.

However, shares in ITC plunged over 5 percent after the budget raised excise duty on cigarettes by 25 percent for cigarettes of length not exceeding 65 mm, and by 15 percent for cigarettes of other lengths.

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