Debt markets were also on edge with bond yields soaring in anticipation of higher interest rates due to the slippages indicated by the Centre on fiscal management. The share market that opened over 36,000 points fell down by 438.79 points soon after the budget was announced in the Parliament today on February 1. Sensex shed 880 points and Nifty 256.30 points to reach 35,066.75 and 10,760.60 respectively. Also, the NSE Nifty dipped below the 10,900-mark to trade at 10,826.50, down by 190.40 points, or 1.72 per cent.
Business Analysts say the fall is a outcome of the beginning of LTCG tax which caused rouse in the market had been striding on a bull run till a couple of days ahead of budget.
"The market is adjusting".
Economic affairs secretary Subhash Chandra Garg said India's growth story is intact so "investors should have no worry".
Reintroduction of the long-term capital gains (LTCG) tax of 10 percent on equities, along with weak global cues, led to a huge sell-off. "By removing exemption of long term capital gains on transfer of shares, this avenue may not be a preferable option any more".
In morning trade, bank, auto and realty sector stocks were making some minor gains but all other sectoral sub-indices were trading in the red. stocks were losing the most.
On a weekly basis, Sensex and Nifty declined by 2.72 and 2.79 per cent respectively, snapping their eight-week-long winning streak.
The Sensex fell 900 points intraday with midcaps witnessing a carnage, down 4.03%, the index's biggest fall in 29 months. "Uncertainties over the execution of spendthrift budget without tampering fiscal deficit target have fuelled the current volatility and may compel the RBI to take a more hawkish stance in the upcoming monetary policy meeting", said Anand James, Chief Market Strategist, Geojit Financial Services.
The yield on the 10-year bond, which closed at 7.6% on Thursday, touched an intraday high of 7.68% before easing to 7.56% on Friday.