BENGALURU: Indian shares reversed earlier gains to close lower on Wednesday, led by a fall in insurance companies after the country’s Union budget proposed to limit tax exemptions for insurance proceeds, while Adani Group shares tumbled.

The bluechip Nifty 50 index closed down 0.26% at 17,616.30, its biggest slide on budget day since a 2.51% fall in 2020. However, the S&P BSE Sensex rose 0.3% to 59,708.08.

The benchmark stock indexes rose as much as 2% earlier in the session after Finance Minister Nirmala Sitharaman raised the rebate limit for personal income tax to 700,000 rupees ($8,550) from 500,000 rupees.

But they reversed gains after Sitharaman later proposed a tax on the total returns upon maturity of life insurance policies, except ULIPs, issued on or after April 1, 2023, if the aggregate premium of such policies was more than 500,000 rupees a year.

“Life insurance players witnessed heavy selling as the budget pushed for the new tax regime, making insurance products less appealing as a tax-saving tool,” said Vinod Nair, Head of Research at Geojit Financial Services.

HDFC Life, SBI Life Insurance, ICICI Prudential Life Insurance Co, Life Insurance of India , General Insurance Corp and Max Financial tumbled between 8.5% to 12.5%.

Shares of Nifty 50-listed Adani Enterprises plunged 28.2% while Adani Ports and Special Economic Zone tumbled 19.2% as the selloff in Adani Group resumed to take the total losses to $84 billion since the Hindenburg report one week back.

Public sector (PSU) banks sank as much as 9.5%, before recouping some losses to close down 5.7%, making them the biggest loser among the 13 major sectors.

Metal stocks closed down 4.5%, mostly dragged by the slump in Adani Enterprises.