The Sensex came crashing down by a huge 500 points as Foreign Portfolio Investors (FPI) pressed sales in banking stocks, despite a favourable outcome for one FPI in the payment of Minimum Alternate Tax (MAT).
Dealers say there was complete basket selling by foreign funds despite a stay by the Honourable High Court for the payment of Minimum Alternate Tax in the case of Aberdeen, a Foreign Portfolio Investor.
Payment of Minimum Alternate Tax has been at the heart of the issue for FPIs after the government rejected the demand by FPIs who contended the decision to pay MAT for earlier years.
Global cues were also not too good with most Asian markets trading weak. In fact, global markets plunged in trade on Tuesday with European markets like the German DAX closing a huge 3 per cent lower. The Dow also lost heavy ground in trade.
Worries that rising crude prices which hit their highest level for 2015 also sent panic in the market. There were worries that this would lead the Reserve Bank of India maintaining interest rates in its policy meet, further pushing banking stocks lower.