Mumbai, India (BBN) – The NSE index fell 1 per cent to a seven-month low, erasing its gains for the year, on worries capital gains taxes would rise after Prime Minister Narendra Modi said market participants should contribute to nation-building.
Finance Minister Arun Jaitley later clarified that the government did not plan to impose long-term capital gains tax, but it was not enough to prevent selling on Monday, reports the Hindu Business Line.
The broader NSE index ended 77.5 points or 0.97 per cent lower at 7,908.25 after earlier hitting its lowest since May 25. The index is now down about 0.5 per cent for the year.
The BSE index closed down 233.60 points or 0.9 per cent at 25,807.10 after falling as much as 1.1 per cent to its lowest in over a month.
Among BSE sectoral indices, realty index fell the most by 3.61 per cent, followed by metal 2.85 per cent, healthcare 2.58 per cent and PSU 2.05 per cent.
Top five Sensex losers were Cipla (-4.94%), Lupin (-2.78%), Tata Steel (-2.64%), ONGC (-2.07%) and SBI (-2.07%), while the major gainers were HUL (+1.65%), Bharti Airtel (+0.25%), TCS (+0.17%), ITC (+0.11%) and L&T (+0.05%).
Domestic sentiment was hit due to worries over outflows from emerging markets to the United States and continued concerns about India’s move to ban higher-value currency notes.
“It (reaction to PM’s comments) is a knee-jerk reaction,” said Gaurang Shah, vice president, Geojit BNP Paribas.
“The fact that we have broken certain levels since Brexit day low, could be spooking markets further.”
A report by SMC Global said: “Asian markets opened for the last trading week of 2016 on a flat to negative note. Japanese markets declined as the yen gained for the fourth straight session. Trading volumes remain subdued even as stock markets in the US, are shut on account of the Christmas holiday. US equities closed on a flat note on the last trading day before Christmas. Meanwhile, the sale of new homes in US increased at the second fastest pace in nine years. According to a report, new home sales surged up by 5.2 per cent to an annual rate of 592,000 in November from 563,000 in October. It was expected new home sales would rise by 3 per cent to a rate of 580,000. The Commerce Department also said the median sales price of new houses sold in November was $305,400, up 0.9 per cent from $302,700 in October but down 3.7 per cent from $317,000 a year ago.”