Consumption-linked sectors buck the trend as Indian shares take a breather after union budget

(Reuters) -Indian shares inched lower in a special session for the union budget on Saturday, as markets took a breather after a four-session rally, while a rise in consumption-linked sectors due to positive tax announcements capped losses.

The Nifty 50 fell 0.56% to 23,372.35 points, as of 12:37 p.m. IST, while the BSE Sensex shed 0.56% to 77,069.85.

Consumption-linked sectors such as fast-moving consumer goods rose 3.1%, while auto gained 2.1%, buoyed by a cut in personal income tax rates in a bid to boost consumption across Asia’s third-largest economy.

“The budget has met market expectations, with focus on consumption revival, capex leading to some positivity,” said Gaurav Dua, senior vice president and head of capital market strategy at Mirae Asset Sharekhan.

Markets are taking a breather after a four-session rally in the run-up to the budget.

“The muted reaction of the benchmarks to the budget is because of no major negative surprises,” Dua added.

Ten of the 13 major sectors declined, while the more domestically-focussed mid-cap and small-cap indexes shed about 0.7% and 1%, respectively.

Insurance companies such as SBI Life and HDFC Life rose 2.3% each, while ICICI Prudential Life gained 3%. The rise comes after the government announced it will raise the foreign direct investment limit to 100% in the insurance sector.

Pipe and infrastructure companies gained after the government extended a scheme to enhance water supply for till 2028.

Fertiliser companies rose after the government announced a further increase in urea supply.

(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Savio D’Souza, Eileen Soreng and Sonia Cheema)