Equities close deep in red, Sensex sheds over 800 points

However, the barometer 30-scrip Sensitive Index (Sensex) of the BSE closed below the 36,000-mark at 35,965.02 points – down 68.71 points or 0.19 per cent from its previous close.

With the Budget out of the way, the focus turns to RBI’s monetary policy to be released later this month. “Rising interest rates domestically and tax on LTCG could result in minor reversal of this trend”, said Dhiraj Relli, MD & CEO at HDFC Securities.

“Revised fiscal deficit estimate for 2017-18 is 3.5 percent of GDP, fiscal deficit of 3.3 percent expected for 2018-19”.

Indian stocks nosedived on Friday as investors were disappointed by a Union budget that focused on populist measures ahead of general elections in 2019 and imposed a long-term capital gains tax (LTCG) on equities.

Analysts have linked the carnage at Dalal Street to the imposition of 10 percent long-term capital gains tax on equities.

Although the market opened on positive note on Thursday, it slid sharply after the FM announced long term capital gains tax on equity investments beyond Rs 1 lakh, media reported. The levy will be applicable only on profits exceeding 100,000 rupees ($1,572) for the relevant financial year and profits up to January 31, 2018 would be “grandfathered”. Investors will also have to pay a 10 per cent tax on distributed income from equity-oriented mutual funds.

The government introduced the LTCG this time, a 10% tax on any amount gained over Rs. 1L, on shares bought more than a year back. What hurt the most was a target for 3.3 per cent for FY19 against the 3 per cent projected earlier.

Experts caution that there could be more weakness left in the market.

“Clearly, the government did not follow the glide path (for fiscal consolidation) …”

Realty stocks the biggest casualty, fell over 6%.

IT was the lone gainer by 0.15 per cent.

In Asia, Japan’s Nikkei ended lower by 0.83 per cent, while Shanghai Composite Index shed 0.21 per cent. Hong Kong’s Hang Seng, however, rebounded 0.86 per cent.