The blue-chip FTSE 100 index ended 0.3% lower, weighed by weakness in miners and insurance firms. The domestically-orientated FTSE 250 index inched up 0.1%, led by pub operators.
J D Wetherspoon, Mitchells & Butlers and City Pub Group rose between 1.5% and 5.9% after Sunak scrapped a planned increase in duty on alcohol worth about 3 billion pounds ($4 billion) and simplified taxes.
Overall market moves were limited as Sunak used his half-yearly budget statement to announce multi-billion-pound investments, but forecasters said the government's tax take was on course to be its biggest since the 1950s.
"There have been several winners in today's budget - retail, leisure and hospitality companies in particular as they benefit from 50% discount on business rates for the next year, and simplified alcohol taxes," said Emma Wall, head of investment analysis at Hargreaves Lansdown.
"However, with the minimum wage up it's not all good news for restaurants, bars and shops, coming off the back of a torrid couple of years."
Sunak also vowed to protect households from rising inflation. Investors are expecting the Bank of England to raise interest rates next week for the first time since the start of the pandemic amid soaring fuel costs and labour shortages.
Among individual stocks, GlaxoSmithKline rose 0.5 after the pharmaceutical company lifted its annual profit forecast following strong third-quarter results.
Harry Potter publisher Bloomsbury Publishing increased its dividend after reporting a strong rise in half-year revenue and profit, pushing its stock up 4.3%.
Miners Glencore, Rio Tinto and Anglo American fell between 1.5% and 2.3%, while weaker crude prices hit oil majors BP and Royal Dutch Shell. [O/R]
Precious metals miner Fresnillo Plc slipped 3.5% after reporting a fall in gold and silver production for the quarter.
(Reporting by Bansari Mayur Kamdar, Sruthi Shankar and Amal S in Bengaluru; Editing by Subhranshu Sahu and Vinay Dwivedi and Kirsten Donovan)
By Bansari Mayur Kamdar