Benchmark indices fell sharply in trade, as weak global cues and Long Term Capital Gains on shares levied by the Union Budget 2018 saw a huge selling pressure. Tax on distributed income of equity mutual funds also weighed on sentiments.
The Sensex was last seen trading at 35,353 points, down 570 points over the previous days close, while the Nifty was down 175 points at 10,842 points.
There were also worries that the Budget would stoke inflation, as farm income rises, forcing the RBI to hike interest rates.
Tata Power, HDFC, Bharat Heavy and ONGC were among the major losers in trade. Most of the government banking stocks fell sharply after bond yields rose and bond prices fell.
Among the worst hit were Canara Bank and Bank of Baroda. Compounding worries were rising bond yields in the US that pushed global stock prices lower.
Meanwhile, in Asia the Kospi and the Nikkei saw cuts of more than one per cent in trade.