Mumbai, India (BBN) – The NSE index hit 7-month low and the VIX index, the volatility index, surged 9 per cent as investors were spooked that India may impose higher capital gains taxes after Prime Minister Narendra Modi had said on Saturday people in financial markets must make a “fair contribution” to nation building.
But the Finance Minister Arun Jaitley had on Sunday clarified the government does not plan to impose long-term capital gains tax, after local media interpreted Modi’s comments a pitch for higher taxes in markets, reports The Hindu Business Line.
The NSE index fell as much as 1.15 per cent to lowest since May 25.
Apart from profit-booking and sustained capital outflows by foreign funds, a weak trend in other Asian bourses mainly dampened the sentiment.
At 12 noon, the 39-share BSE index Sensex was down 256.28 points or 0.98 per cent at 25,784.42 and the 50-share NSE index Nifty was down 84.35 points or 1.06 per cent at 7,901.40.
Among BSE sectoral indices, metal index fell the most by 3.1 per cent, realty 2.39 per cent, infrastructure 1.8 per cent and PSU 1.69 per cent.
Top five Sensex losers were Cipla (-4.01%), Tata Steel (-2.18%), Tata Motors (-1.96%), Power Grid (-1.89%) and Hero MotoCorp (-1.81%), while the only gainers were HUL (+0.4%), Lupin (+0.06%) and Dr Reddy’s (+0.02%).
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.”