Tax talk spooks bulls, Sensex hits 7-month low

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The market hit a seven-month low on Monday despite clarification by the Union finance minister Arun Jaitley that the government has no plans to hike long-term capital gains tax on stocks.

The BSE Sensex losing 233.60 points, or 0.90% to close at close at 25807.10, while Nifty ended at 7908.25, falling 77.50 points, or 0.97%.

Reflecting the jittery sentiment, volatility index India (VIX) rose nearly 10% to 16.6025.

Prime Minister Narendra Modi, had on Saturday sought “fair” contribution of stock market participants in “nation building” through taxes.

Out of the 30-share Sensex pack, 25 ended lower on Monday. Mid -cap stocks bore the brunt of the aggressive selling with hi-beta metal, realty, among others, turning out to be bitter pills for investors. Among BSE sectoral indices, realty fell 3.61%, followed by metal 2.85%, healthcare 2.58%, PSU 2.05% and power 1.79%. Pharmaceutical stocks too were among the major laggards with Cipla plunging 4.94% followed by Lupin 2.78%. Tata Steel fell 2.64%, ONGC 2.07% and Powergrid 2.06%.

“The Prime Minister’s statement came at the time when sentiment is already down and markets are hoping for some favourable announcements. We feel traders should maintain extra caution now as Nifty is steadily drifting lower. And on expected lines, the slide in banking is causing maximum damage at present. Traders with a balanced trading portfolio- mix of long and short both, are still doing fine and we suggest maintaining that bias ahead as well,” Jayant Manglik, president, retail distribution, Religare Securities Ltd, said.

However, value buying in select stocks and short-covering ahead of December month expiry in the derivatives segment on Thursday aided indices recoup losses to some extent. Hindustan Unilever rose most At 1.25%, Bharti Airtel 0.25% and TCS 0.17%. Foreign capital outflows continued, tracking other global markets. Investors see equities to remain volatile in the near term as most foreign funds will be on year-end holidays amid absence of any major trigger, as per experts.

Meanwhile, foreign funds sold shares worth Rs 1,462.65 crore last Friday, as per the provisional data. Major Asian indices were down as investors cashed in on a recent global rally fueled by expectations from the incoming administration of US President-elect Donald Trump. Japan’s Nikkei shed 0.16% but Shanghai Composite rose 0.40%. Hong Kong, Singapore and Kuala Lumpur markets remained closed today for a public holiday. Europe was mixed in afternoon trade as indices in London and Paris moved up by 0.06% and 0.10%. Frankfurt was down 0.05%. The mid-cap index fell 2.17% while the small cap lost 2.10%.

A total of 1,388 scrips declined, 245 advanced while 60 remained unchanged. Total securities that hit their price bands were 121.

Turnover in the cash segment fell to Rs 13,142.71 crore from Rs 15,265.82 crore as on Friday.

A total of 6,625.40 lakh shares changed hands in 5,951,623 trades. The market capitalisation of NSE stood at Rs 10,062,765 crore.