Indian shares edge lower for 2nd day ahead of budget

File Image of BSE Sensex

The BSE Sensex closed 839.91 points, or 2.34%, down at 35,066.75.

The market's mood suffered another setback after Fitch Ratings said on Friday that the high debt burden of the government constrains India's rating upgrade. Investors were also miffed as the fiscal deficit target for FY2018 was extended to 3.5% of GDP in the Budget, from 3.2% pegged earlier.

From the next financial year, the government will impose a long term capital tax at the rate of 10% on the gains to the tune of Rs one lakh and above.

The broader NSE Nifty cracked below the 10,800-mark by shedding 256.30 points, or 2.33%, to 10,760.60 at close. The BSE 30-share barometer fell by 162.24 points or 0.45 per cent to 36,121.01 with IT, tech, healthcare, metal, capital goods and banking stocks falling up to 0.68 per cent. Both the indices ended 2.7 per cent down for the week, which is their biggest weekly percentage drop since August 2017.

Bajaj Auto (4.90%), Bharti Airtel (4.62%), Axis Bank (4.28%) and Maruti Suzuki India (4.28%) were the top losers.

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Market breadth was negative with 182 advances against 2,009 declines.

The BSE Sensex, which had recovered after a 300-odd point dip on Thursday during Finance Minister Arun Jaitley's speech, opened 200 points lower and tumbled through the day till it touched a low of 35,006.41 - a net loss of 900 points.

After hitting an intra-day high of 63.72, the home currency retreated sharply towards the tail-end of trade on renewed dollar pressure and settled with a modest 4 paise loss at 64.06.

Among the major reasons, the re-introduction of LTCG hurt investor sentiment most, while the upcoming Reserve Bank of India (RBI)'s monetary policy due next week, where it is expected to hike rates, also caught attention. By 12:40, seconds after the Finance Minister uttered Long Term Capital Gains Tax in the Parliament, the enthusiasm was skittled.

Globally, Asian stocks finished on a mixed note as rising bond yields and mixed earnings from top US companies helped induce some caution ahead of the closely-watched USA monthly jobs report for January, due later in the day.

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