Markets continued to remain on the backfoot on Wednesday -- registering the lowest close over a year -- as the BSE Sensex ended lower by 243 points dragged down by a set of global cues, including unimpressive manufacturing numbers from China, Europe and the US.
Apparently, the government's decision to scrap minimum alternate tax -- which is being hailed as a "bold step" -- was not enough to save the day.
The markets were off to a promising start, but all the gains were gone in a flash after it became clear that the China contagion is spreading with alarming intensity, with the US and Europe throwing up weak factory numbers.
The Asian markets were firmly on a crash course tracking overnight losses on the Wall Street, weighed down by worries of a global growth slowdown.
On Tuesday, Finance Minister Arun Jaitley said the government has accepted the recommendation of a panel headed by Law Commission Chairman A P Shah and decided to exempt FIIs from MAT claims prior to April 1, 2015.
Lacklustre domestic macros showing a slowing GDP growth for the June quarter and a drop in manufacturing PMI added to the risk-off sentiment.
The BSE Sensex, helped by value-buying in realty, FMCG, IT and technology, scaled the day's high of 25,939.37, before closing down 242.88 points, or 0.95 per cent, at 25,453.56 -- its lowest close since August 8, 2014.
The 50-share benchmark Nifty managed to hold above the 7,710-mark, which ended the day at 7,717, down 68.85 points, or 0.88 per cent.
"Fresh data out of China showing Chinese factory activity contracted in August coupled with uncertainty over Fed's decision on raising interest rates in a meeting later this month are causing jitters across the globe," said Shreyash Devalkar, Fund Manager-Equities, BNP Paribas Mutual Fund.
BHEL bore the brunt of the sell-off, tumbling as much as 5.10 per cent as M&M, ONGC, SBI and Coal India ended in the red.
In the sectoral space, power took the biggest blow, followed by PSU, banking, capital goods, auto and metal.
Meanwhile, foreign investors net sold equities worth Rs 675.32 crore on Tuesday, provisional data showed.
Asian markets ended mixed as premier indices in China, Japan and Singapore closed lower by up to 1.18 per cent.
Key indices in France, Germany and the UK traded lower by up to 0.37 per cent.