Sensex, Nifty collapse to 3-week low on doubt over tax issues

The aggressive all-round selling by foreign funds on lot of uncertainty on tax issues for overseas investors kept the market under severe pressure for the fourth session in a row as the benchmark S&P BSE Sensex today crashed by 556 points and the CNX Nifty by 158 points to settle at three-week low of 27,886.21 and 8,448.10 respectively.

Market participants are worried over tax-related issues for foreign investors as reports indicated that income tax authorities have issued notices for some foreign institutional investors (FIIs) relating to their minimum alternate tax (MAT) liabilities for prior years.

However, the Union Budget already made it clear that the FIIs dont have to pay MAT on capital gains from April 2015 onwards. FIIs sold shares worth Rs 675.71 crore last Friday, as per provisional data.

Other factors such as on-going Q4 results season as IT bellwether TCS disappointed the market, fall in country's merchandise exports leading to widening the trade deficit and fall in the rupee value to over 1-month low to over 62.90 intra-trade also weighed on the sentiment.

Besides TCS, most of the other IT shares too succumbed with profit-booking.

The petro-chem giant and among the top heavyweight, Reliance Industries (RIL) was the top loser from the sensex pack despite better-than-expected Q4 results and closed down by 4.46 pct as analysts expected the company would not be able to sustained its profibility in the coming quarters.

The BSE 30-share barometer initially touched a high of 28,539.46 but later continued its downslide to log a low of 27,802.37 before concluding at 27,886.21 --lowest closing since March 27, 2015 when it had settled at 27,458.64. In straight four trading sessions, it had collapsed by 1,158.23 points or 3.99 pct. .

Asian stocks ended lower as China shares dived as fears of a regulatory crackdown on the world's hottest stock market offset its central bank's move to bolster the slowing economy.

Key indices in China, Hong Kong, Japan, Singapore and Taiwan fell in the range of 0.09 per cent to 2.02 per cent, while South Korea's Kospi moved up by 0.19 per cent.

European markets were trading mixed as indices in France and Germany firmed up by 0.46 per cent and 0.46 per cent, respectively, while in the UK was quoting down 0.19 per cent.

On the Sensex, RIL was the biggest loser with a fall of 4.46 per cent, followed by Hero MotoCorp at 3.96 per cent, Cipla 3.03 per cent, M&M 2.96 per cent, Axis Bank 2.94 per cent, ITC 2.77 per cent, HDFC 2.69 per cent, L&T 2.51 per cent, ONGC 2.47 per cent and Dr Reddy's 2.44 per cent.

Among BSE sectoral indices, realty fell by 2.78 per cent, followed by FMCG 2.71 per cent, consumer goods 2.17 per cent, IT 2.08 per cent, power 2.04 per cent and teck 2.02 per cent.

Smallcap and midcap indices also fell by 2.17 per cent and 2.02 per cent, respectively due to heavy selling pressure.

Market breadth remained negative as 1,961 stocks closed in the red, 878 gained, while 103 held steady.

Total equity turnover rose further to Rs 5,004.48 crore from Friday's level of Rs 3,456.92 crore.

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