Benchmark indices pared most losses after sliding more than 3% and the rupee weakened as a global market rout whacked sentiment, adding to existing investor concerns ahead of a central bank meeting this week and a new capital gains tax later in the year. Overnight, US markets had suffered their biggest loss in over six years. The fall comes on the back of a spike in bonds yields.
The broader Nifty50 and the benchmark S&P BSE Sensex each fell as much as 3.7% on Tuesday, sixth consecutive session of falls, with both erasing their gains for the year. The slump in Wall Street overnight comes as India’s record-setting share rally came under threat following the government’s announcement of a 10% long-term capital gains tax in equities, which starts in April. MSCI’s broadest index of Asia-Pacific shares outside Japan slid 3.5% to a one-month low, which would be its biggest fall in more than a year and a half, a day after it had fallen 1.6%.