Sensex Hits Seven-month Low On Worries Over Capital Gains Tax

(RTTNews) - Indian shares fell sharply to hit seven-month low on Monday after Prime Minister Narendra Modi on Saturday said the contribution of tax from those who make money on the markets has been low.

With a little over month left for the annual Budget, the Prime Minister's comments underlining the need to levy higher taxes on capital market transactions worried investors already rattled by demonetization woes and continuous selling by foreign investors on expectations of more aggressive Federal Reserve rate hikes in 2017.

An assurance from Finance Minister Arun Jaitley that Modi's statement on tax was misunderstood by some sections in the media and the government has no intention to impose tax on long-term capital gains on security transactions failed to allay the fears of investors.

The benchmark BSE Sensex fell 233.60 points or 0.90 percent to 25,807.10 after suffering its biggest loss in five last week.

The broader Nifty index finished 77.50 points or 0.97 percent lower at 7,908.25, with Lupin, Bank of Baroda, Aurobindo Pharma, Cipla and Hindalco Industries losing 3-5 percent.

Divi's Laboratories slumped nearly 12 percent to extend Friday's losses on concerns over U.S. regulatory issues.