(Updated at 0908 GMT)

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Czech CB's Frait hints at another 50-bp rate cut, report

says

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Digital tax talks in G20 spotlight as U.S. tariff threat

looms

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IMF to consider Kenya's economic plan at end of August

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MSCI EM stocks index up 0.2%, FX flat

By Johann M Cherian

July 23 (Reuters) - Indian equities hovered near the

flat mark on Tuesday, following a budget presented by the newly

elected local government, while investors in developing markets

also stayed cautious ahead of interest rate decisions by central

banks in Hungary and Turkey.

Indian stocks initially dropped as much as 1.5% and

the rupee hovered near sessions lows of 83.71 per the

dollar as traders reacted to tax hikes on equities and

derivatives trading.

Since March 2020, the index has soared more than 200% due to

increased trading in the derivatives market.

India's government lowered its fiscal deficit target to 4.9%

of economic output for the financial year ending March 2025,

from 5.1%, which analysts called prudent.

"(The finance ministry) has managed to meet the demands of

coalition parties, ramp up spending on employment programmes

more generally and reduce the income tax burden for low-earners,

all while keeping the fiscal deficit in check," said Shilan

Shah, deputy chief emerging markets economist at Capital

Economics.

"That has been made possible by a bumper dividend transfer

from the (central bank), an upward revision to (indirect tax)

revenue projections and a rise in the long-term capital gains

tax."

Elsewhere, Turkish equities lost 0.7% and the lira

hovered near record lows, ahead of a central bank

decision, with economists broadly expecting no change to the

current 50%, until later in the year.

In central and eastern Europe, the Czech koruna

led declines with a 0.5% loss relative to the euro after

Vice-Governor Jan Frait was quoted saying a 50 bps reduction

cannot be ruled out when the central bank meets next week. The

yield on sovereign bonds

across the curve also dipped between 2 and 4 bps.

Hungary's forint slipped 0.2%, on expectations for

the domestic central bank to lower borrowing costs by 25 basis

points (bps) to 6.75% at 1200 GMT.

In Africa, Kenya's shilling weakened 0.6% and

yield on the 5-year sovereign bond climbed 20 bps.

The country submitted an economic repair plan to the

International Monetary Fund and it expects the board to review

it for approval at the end of August, after recent protests

against tax hikes forced President William Ruto's government to

rapidly draw up new spending cuts.

Talks over a global tax deal are continuing well past a June

30 deadline and governments are now looking to a Group of 20

finance leaders meeting for progress on a stalled plan to

reallocate taxing rights on large multinational companies.

Investors also monitored protests in Uganda. The shilling

was flat and yields on short-term sovereign bonds

slipped.