Indian shares up, bond yields slip ahead of federal budget

BENGALURU: Indian equities rose and bond yields slipped ahead of the federal budget on Monday, where Finance Minister Nirmala Sitharaman is expected to unveil several measures to bolster the economy following the impact of the COVID-19 pandemic.

The ruling party of Asia's third-largest economy has promised a game-changing budget to revive the virus-hit economy, with Sitharaman likely to increase spending by more than 15% in 2021-22, with an emphasis on infrastructure and healthcare, although the nation carries a mountain of debt.

There are also expectations that India will unveil some tax relief measures for pandemic-hit sectors such as real estate, aviation, tourism and automakers.

A surge in ICICI Bank after strong quarterly earnings lifted the NSE Nifty 50 index 0.81% to 13,744.55 by 0443 GMT, while the benchmark S&P BSE Sensex was up 0.95% at 46,723.66.

The 10-year bond yield slipped to 5.90% from Friday's close of 5.949%, while the rupee was flat.

"We are expecting equity markets to fall after the budget, based on precedent, especially due to the huge expectations the government has built up this time," said Yogesh Nagaonkar, founder and chief executive officer of Rowan Capital Advisors in Mumbai.

"The budget will target the bottom of the pyramid, with key elections around the corner. The Nifty may fall sharply from here unless the government decides to remove the long-term capital gains tax."

The stock indexes rocketed to record highs earlier in 2021 as India started a huge vaccination drive and as corporates reported encouraging earnings, but fell for six straight sessions in the days leading up to the budget.

India's economy is seen clocking robust growth of 11% for the coming fiscal year, after likely contracting 7.7% in the current fiscal year to March 31, an annual economic survey showed on Friday.

Investors are also awaiting monthly sales numbers from automakers on Monday.