BENGALURU: Indian benchmarks fell on Wednesday, dragged by financials, with sentiment still sour a day after the government raised the tax on gains from equity investments.

The NSE Nifty 50 fell 0.27% to 24,413.5, while the S&P BSE Sensex settled 0.35% lower at 80,148.88.

The tax hike on long-term capital gains “certainly increases the hurdle for investors in financial assets and hence it is a sentimental negative,” said Harish Krishnan, co-chief investment officer and head of equity at Aditya Birla Sun Life Asset Management Company.

The blue-chips had slipped 1.6% in the previous session after the government hiked the tax rate on equity derivatives trades and on profit from equity investments. However, a jump in consumer stocks helped the indexes recover to end with relatively lower losses.

“The tax hikes have overshadowed the positives from the budget,” Krishnan added.

Six of the 13 major sectors logged losses, on the day.

Banks, financial services, private banks dropped 0.6%-1%.

Top private lenders HDFC Bank, ICICI Bank and state-owned lender State Bank of India lost between 0.3% and 1.5%.

The drop in financials could be due to likely selling by foreign investors, who have higher ownership in the sector than other segments, according to two analysts.