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The Indian equities have continued gains from the morning session and closed sharply higher on the Budget day as the Centre continued with its strong capital expenditure spending for FY23.

Sensex settled at 58,862 points, up 1.5 per cent, whereas Nifty settled at 17,576 points, up 1.4 per cent.

To sustain high growth rate, the Centre has earmarked a massive budgetary outlay of Rs 7.50 lakh crore for FY23.

In her Budget speech to the Lok Sabha on Tuesday, Finance Minister Nirmala Sitharaman proposed to increase the capital budget outlay by over 35 per cent year-on-year.

"The Union Budget with its big tech push and capex thrust has used the fiscal space arising out of buoyant tax collections to spur growth and revive private capex," said S. Ranganathan, Head of Research at LKP securities.

"The Dalal Street cheered the budget as Indices rose 1.5 per cent with its usual share of volatility as India VIX dropped sharply below 20. The paradigm change seen in the digital push together with the narrative for urban development quite clearly signalled a pro-growth stance."

Among the sectors, realty, infrastructure, steel and cement traded deeply in the green.

Nifty metal jumped 4.5 per cent on Tuesday evidently due to the fresh expenditure announcement. Besides, Nifty FMCG, IT and pharma rose 2 per cent, 1.6 per cent, and 2.3, respectively.

Among stocks, Tata Steel rose 7.5 per cent, Sun Pharma rose 6.9 per cent, IndusInd Bank 6.1 per cent, Shree Cement 5.5 per cent, and L&T 4.5 per cent.

Steel maker JSW Steel's stocks rose over four per cent.

"It is a long-term growth oriented budget which the market has welcomed, given no headroom for cautiousness and populist measures. It is expected to support growth in the future; however, it is missing some balancing measures in context of the current inflationary and slowing economy," said Vinod Nair, Head of Research at Geojit Financial Services.

"Supportive measures were needed for rural areas, agriculture, low taxpayers and for sectors impacted by the pandemic. high capex, fiscal deficit and borrowing plans in the background of a high inflation, commodity and oil prices and rising interest rates will be challenges in the short to medium-term."

On the other hand, Nifty PSU bank, auto, and oil & gas declined.

The decline in PSU bank and oil & gas stocks were majorly due to lower fiscal deficit pegged in the Budget for FY23.

The government has set a target of Rs 65,000 crore from divestment in the financial year FY23.

Notably, it also lowered the divestment target for FY22 to Rs 78,000 crore from Rs 1.75 lakh crore.

This indicates that major divestment proceeds expected from Life Insurance Corporation of India's IPO and strategic divestments of BPCL and amongst others may not fructify on time.

On Tuesday, oil company BPCL shares tanked nearly five per cent.

Besides BPCL, PSUs such as oil major IOCL and ONGC too fell sharply on the Budget day.

Looking back at the past decade, India's key equity indices have mostly given a negative reaction to the Union Budget. As per the data, profits have mostly been booked on the day when the Finance Minister tables the Finance Bill in the Parliament.

In terms of budget day, the biggest fall in the last decade was on FY21 Budget day, where the markets crashed nearly 2.5 per cent, while on the FY22 Budget day, it rose the most -- 4.7 per cent.