India shares hit two-week high after growth-focused budget
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BENGALURU -Indian shares hit a two-week high led by financial stocks on Wednesday, after the government stepped up spending to fuel growth in the pandemic-hit economy, although disappointing earnings from Tech Mahindra capped gains.
Both bourses extended a post-budget rally, with the blue-chip NSE Nifty 50 index up 0.95% at 17,743.45 as of 0427 GMT, and the S&P BSE Sensex advancing 0.94% to 59,417.19.
In the previous session, the indexes had climbed nearly 1.5% each after the federal budget unveiled increased spending to 39.45 trillion rupees in the coming fiscal year to build public infrastructure and drive economic growth.
"Stocks related to the capex cycle and related credit growth are in the nascent stage of a growth cycle and valuations are nowhere close to the euphoric valuations visible in the 'growth and low volatility' stocks in the market," ICICI Securities said in a note.
After recovering from a sell-off in recent weeks driven by U.S. interest rate and inflation worries, the blue-chip indexes are now around 4.5% off record highs reached in October.
The brokerage added that the lending segment, including leading banks like SBI, Axis Bank, HDFC Bank and Kotak Mahindra Bank would benefit from increased government spending.
The Nifty Bank index and the Nifty PSU Bank index led gains among sub-indexes, rising as much as 1.6% and 1.8%, respectively.
Cigarette maker ITC rose as much as 2.3% to its highest since mid-December, with Morgan Stanley and Jefferies saying unchanged tobacco tax rates in the budget removed an overhang on the stock.
Tech Mahindra fell 4.2% after the IT services company missed expectations for quarterly profit on rising wage costs.
Heavyweight mortgage lender Housing Development Finance Corp climbed 1.8% ahead of its quarterly results.
