The BSE Sensex and Nifty were choppy ahead of Finance Minister Arun Jaitley's first Budget announcement due at 11 a.m. The Sensex opened higher, but gains were short-lived, while the Nifty failed to hold above the key 7,600 levels.
The Economic Survey, unveiled on Wednesday, called for tough measures to shore up public finances and reduce inflation, reinforcing hopes that Prime Minister Narendra Modi's government will deliver a non-populist, prudent Budget today.
Investors say Mr Jaitley's Budget will be a "make or break" event for stock markets, which have hit successive record highs on hopes of big bang reform announcements.
From May 16, when Prime Minister Narendra Modi won a historic mandate, the Nifty has gained 5.3 per cent. For the year, the 50-share benchmark is up 20 per cent outperforming most markets across the globe.
However, some analysts have warned that investors may be expecting too much out of the Budget and worry that markets could be hit at any hint of disappointment. If Mr Jaitley does not come out specifics to boost growth and shore up the government's revenues, markets may fall sharply, the way they did after the Railway Budget announcement.
Metal stocks led the gainers, with the BSE metal sub-index rising 0.6 per cent as of 09.50 a.m. Stocks that are considered defensive, pharma and FMCG, saw selling pressure.
On the Nifty, 18 stocks traded higher. Aluminium maker Hindalco, Coal India, mortgage major HDFC were up between 1.5 and 2 per cent.
IT outsourcer Tech Mahindra was the top Nifty loser, down 2 per cent. Drugmakers such as Lupin and Dr Reddy's also traded lower.
Global cues:
Asian equities rose and the dollar dipped on Thursday, after the US Federal Reserve indicated it was not in a rush to end quantitative easing and begin hiking rates.
Traders expect the market to remain range-bound until the budget announcements which will start at 11 a.m.
As of 09.50 a.m., the Sensex traded 14 points higher at 25,459, while the Nifty was down 6 points at 7,579.
(With inputs from Reuters)
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