Mumbai: Benchmark Sensex suffered its worst rout in more than two years today as the Budget proposals on taxing equities torpedoed investor sentiment.
The 30-share index plummeted 840 points -- its biggest single-day slump since August 24, 2015 -- while the broader NSE Nifty tanked over 250 points to finish below the 10,800- mark.
Investors saw a wealth erosion of more than Rs 4.5 lakh crore as stocks went into a free-fall.
The Budget 2018-19 presented on Thursday imposed long- term capital gains tax of 10 per cent on equities. Investors will also have to pay 10 per cent tax on distributed income from equity-oriented mutual funds.
Finance Minister Arun Jaitley also projected a fiscal deficit of 3.5 per cent of GDP for the current fiscal against the earlier target of 3.2 per cent.
Market mood suffered another setback today after Fitch Ratings said the high debt burden of the government constrains India's rating upgrade.
The flagship Sensex crashed 839.91 points, or 2.34 per cent to end the day at 35,066.75 as jittery investors slashed their portfolios.
This is its biggest single session fall since August 24, 2015, when it had lost 1,624.51 points.
The broader NSE Nifty cracked below the 10,800-mark by tanking 256.30 points, or 2.33 per cent, to 10,760.60 at close. Intra-day, it hit a low of 10,736.10.
On a weekly basis, the Sensex declined 983.69 points, or 2.72 per cent, while the Nifty fell 309.05 points, or 2.79 per cent, snapping their eight week-long winning streak.
"Volatility in bonds and rupee over fiscal slippage and stocks' churn ahead of FY19 over LTCG prompted sharp pull back in stocks.
"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.
Meanwhile, domestic institutional investors (DIIs) sold shares worth Rs 358.50 crore, while foreign portfolio investors net bought shares worth Rs 1,099.780 crore yesterday, as per provisional data.
Bajaj Auto was the worst performer among the Sensex constituents by falling 4.90 per cent, followed by Bharti Airtel 4.62 per cent.
Other losers were Axis Bank, Maruti Suzuki, Reliance Industries, Tata Steel, M&M, HDFC Ltd, ICICI Bank, Hero MotoCorp, Kotak Bank, L&T, SBI, Tata Motors, Yes Bank, Adani Ports, IndusInd Bank, NTPC and HDFC Bank, losing up to 4.28 per cent.
All the sectoral indices ended in the red. BSE realty plunged 6.28 per cent, followed by infrastructure (4.03 per cent), power (3.94 per cent), capital goods (3.59 per cent), auto (3.47 per cent), consumer durables (3.37 per cent), finance (3.23 per cent), PSU (3.11 per cent) and oil & gas (3.04 per cent).
Broader markets too suffered a meltdown, with the small- cap index falling 4.65 per cent and mid-cap index down 4.03 per cent.
Globally, in the Asian region, Japan's Nikkei ended 0.90 per cent down, while Hong Kong's Hang Seng shed 0.12 per cent. Shanghai Composite Index, however, gained 0.44 per cent.
In the Eurozone, Frankfurt's DAX 40 fell 1.33 per cent and Paris CAC fell 1.23 per cent in their early deals. London's FTSE shed 0.29 per cent.