Stock markets fall on Fitch comments, capital gains tax

The benchmark stock indices plunged in late morning trade after Fitch Ratings said weak public finances constrain India's sovereign ratings.

The 30-share BSE Sensex was down 481.63 points or 1.34 per cent at 35,425.03, and the 50-share NSE Nifty fell by 190.40 points, or 1.72 per cent to 10,876.70.

About eight shares declined for every share rising on the BSE.

Stocks had opened lower as the government's proposal to impose 10-per cent long term capital gains tax on equity gains of over Rs1 lakh triggered profit-booking in frontline stocks.

Finance minister Arun Jaitley projected a fiscal deficit of 3.5 per cent of GDP for the current fiscal against the earlier target of 3.2 per cent, which also dampened market sentiment.

It took another jolt after Fitch Ratings today said the high debt burden of the government constrains India's rating upgrade.

Global markets were also trading in the negative after most of the US stock indices fell due to political crisis and growth concerns.

The broad market is reacting negatively to the focus on rural and social schemes and the return of LTCG tax. There is stock-specific pressure due to unwinding of positions in high beta stocks.

Widespread selling dragged down all the sector indices led by realty, consumer durables, power, capital goods and banking sectors.

Stocks had opened down as the government's proposal to impose a 10 per cent long term capital gains tax on equity gains of over Rs1 lakh hit triggered profit booking in frontline stocks.

Banking stocks led by Yes Bank, SBI, ICICI Bank, Kotak Bank, HDFC LTD and IndusInd Bank suffered losses up to 3.80 per cent.

Other losers that pulled down the key indices from their crucial levels were ONGC, Tata Steel, Maruti Suzuki, M&M, Hero Motocop, Power Grid, Coal India, Asian Paints, Reliance Ind, Coal India.

In the broader market, the BSE Midcap index fell by 2.79 per cent while the Small index took a bigger hit of 3.67 per cent on heavy losses in PC Jewellers.

PC Jewellers tanked 50 per cent in early trade before trading at Rs397.10, down by 17 per cent at 11:35 am.