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Indian shares surrendered early gains on Tuesday, as caution prevailed ahead of the union budget due at 11 a.m. IST, which could have a huge bearing on the trajectory of markets.

The NSE Nifty 50 and S&P BSE Sensex opened about 0.3% higher but were trading flat at 24,516.65 points and 80,553.96 points, respectively as of 9:34 a.m. IST.

Volatility hovered around the six-week high levels hit in the previous session.

"The markets are off to a cautious start ahead of the union budget, especially given the conservative growth forecast in the economic survey released on Monday," said Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services Ltd.

"Though the budget is largely expected to be growth-oriented, with the announcement of some measures aimed at addressing the rural economy, this is largely factored in by the market."

The Nifty has hit multiple all-time highs through its roughly 13% rally this year, despite a near 6% slide on June 4 when Prime Minister Narendra Modi's party returned to power but by unexpectedly having to rely on allies. Still, the index has risen in each of the seven weeks since.

The budget is expected to focus on job creation and boosting consumption, which analysts expect will be positive for sectors such as consumer goods, real estate and autos.

But, analysts said investors are also cautious of negative surprises, especially related to taxes on capital gains or on derivatives trading.

"If there are no changes in long-term capital gains tax that will be a big relief for the market and the market is likely to react positively to that," said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

On the day, eight of the 13 major sectors logged losses.

Federal Bank jumped 3.6% after the central banks cleared the appointment of veteran banker KVS Manian as the lender's CEO.

It was the top gainer in among mid-caps, which rose 0.2%. Small-caps were 0.2% lower.