A day after Finance Minister Arun Jaitley presented his last full Budget of the NDA government, the benchmark stock indices dropped as 10 per cent tax was announced on Long Term Capital Gains (LTCG). Under the proposed new tax, profits of more than Rs 1 lakh from stock and equity mutual fund investments held over one year will be taxed at 10 per cent.
The 30-share BSE Sensex was 539 points down while the NSE Nifty fell below the key 11,000-mark as 38 of its components dropped. The 50-issue Nifty was trading down at 10,857.500 at 11.30 am.
Stocks had opened down as the government's proposal to impose a 10 per cent long term capital gains tax on equity gains of over Rs 1 lakh hit triggered profit booking in frontline stocks.
Finance Minister Arun Jaitley projected a fiscal deficit of 3.5 per cent of GDP for current fiscal against the earlier target of 3.2 per cent which also dampened the market sentiment.
The sentiment took another jolt after Fitch Ratings today said high debt burden of the government constrains India's rating upgrade.
Banking stocks led by Yes Bank, SBI, ICICI Bank, Kotak Bank, HDFC LTD and IndusInd Bank suffered losses up to 3.80 per cent.
Other losers that pulled down the key indices from their crucial levels were ONGC, Tata Steel, Maruti Suzuki, M&M, Hero Motocop, Power Grid, Coal India, Asian Paints, Reliance Ind, Coal India.
In the broader market, the BSE Midcap index fell by 2.79 per cent while the Small index took a bigger hit of 3.67 per cent on heavy losses in PC Jewellers.
PC Jewellers tanked 50 per cent in early trade before trading at Rs 397.10, down by 17 per cent at 1135hrs.
Global markets were also trading in the negative after most of the US stock indices fell due to political crisis and growth concerns.
- With PTI inputs