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Benchmark indices continued to trade under pressure as investors worry that government may impose long-term capital gains tax.
The NSE Nifty fell about 1% on Monday to a seven-month low weighed by metal, realty, pharma, banking and auto stocks.
At 1:30 pm, the S&P BSE Sensex was trading at 25,918, down 123 points, while Nifty50 was ruling at 7,939, down 47 points. Broader markets under-performed benchmark indices as BSE Midcap fell 1.80% while BSE Smallcap was trading 1.55% lower.
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PM Narendra Modi said on Saturday 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, Finance Minister 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 on Monday.
About 1,905 shares declined against 500 advancing shares on the BSE.
Sectors and Stocks
All sectors were trading in red in the equity indices dragged most by metal, realty, pharma and oil & gas stocks.
Cipla, Tata Motors, ONGC, Tata Steel, Hero Moto and M&M were the top losers while HUL was the top gainer.
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% to its lowest since June 29.
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.
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.
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.
