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Benchmark indices settled the day lower as capital gains tax woes spooked the markets after PM Narendra Modi on Saturday said that people in financial markets must make a "fair contribution" to nation building, comments that were seen as setting up the prospect of higher taxes for investors.
However, Arun Jaitley clarified on Sunday that the government did not plan to impose long-term capital gains tax, though that was not enough to prevent selling in today’s session.
The NSE Nifty ended at a seven-month low weighed by metal, realty, pharma, banking and auto stocks. The index also breached the Brexit lows of 7,927 levels. Sensex ended the day lowest since November 22, 2016.
The S&P BSE Sensex ended the day at 25,807, down 233 points, while Nifty50 settled 72 points lower at 7,913. Broader markets under-performed benchmark indices as BSE midcap fell 2.17% while BSE Smallcap was trading 2.10% lower.
"The market completely ignored the Finance Minister's clarification that government has no plans to tax long term capital gains. Besides, caution ahead of derivative expiry of December month contracts added to the factors," said Jayant Manglik, President, Retail Distribution, Religare Securities.
About 2,035 shares declined against 571 advancing shares on the BSE.
Sectors and Stocks
Almost all the sectoral indices were trading in red dragged mainly by realty, metals, pharma and oil & gas stocks.
Cipla, Lupin, Tata Steel, SBI and Sun Pharma were the top losers while HUL was the top gainer, up 1.65%.
Banking stocks fell, with Bank of Baroda and PNB among the biggest contributors to the decline.
The NSE Bank index fell as much as 1.55% at intra-day to its lowest since June 29. The index ended the day 1.23% down.
Cement shares reeling under pressure with most of the frontline companies falling more than 20% since November 9, on concerns of drop in sales due to fall in demand owing to currency rationing in the wake of demonetisation
Dalmia Bharat tank 15% to Rs 1,186 on the BSE in intra-day trade on Monday. The stock was down 7.77% at closing.
UltraTech Cement hit a six-month low Rs 3,076, was down 22% post demonetization, as compared to 6.5% decline in the S&P BSE Sensex.
Consumer and material stocks also dragged down the indexes with the Nifty Metal index shedding as much as 2.80% to its lowest in over a month.
Among other stocks, Divi’s Laboratories continued to trade under pressure falling to its 28-month low at Rs 745, down 14% on the BSE in early morning trade. The stock was trading at its lowest level since August 2014. It ended the day 11.56% lower.
In past two trading sessions, it tanked 33% from Rs 1,109 on Thursday, after a brokerage report cited 'manipulated data records' as one of the observations made by the US Food and Drug Administration (USFDA) against its Vizag facility.
Global markets
Asian markets were trading mixed. China’s Shanghai Composite index fell 0.84% to 3,279 on Monday morning, while Japan’s Nikkei fell 0.09% to 19,412. Major global markets remained shut on account of Christmas and Boxing Day holidays.
European shares were steady on Friday with the focus on lenders after Deutsche Bank and Credit Suisse settled mortgage securities fraud suits in the United States, and Italy's Monte dei Paschi agreed to a bailout.
The STOXX Europe 600 was flat at its close and unchanged for the week, but the index still on track for its best month since October 2015.
On Friday, Wall Street ended the week on a positive note as investors doubled down on a rally fuelled by optimism that President-elect Donald Trump's policies will boost economic growth.
The Dow Jones advanced 14.86 points, or 0.07%, to close at 19,933.74. The S&P500 rose 2.75 points, or 0.12%, to settle at 2,263.71. The Nasdaq Composite added 15.27 points, or 0.28%, to finish at 5,462.69.
(With inputs from Reuters)
