Indian shares fell for a fifth straight session on Monday in line with broader Asia following a US market rout on Friday, while worries remained that the Reserve Bank of India would turn more hawkish at its policy meeting later this week. The BSE index fell 0.88 percent to 34,757.16, while the broader NSE index lost 0.87 percent to 10,666.55. Both indexes were down for a fifth straight session, their longest losing streak since September 2017.
Investors remained concerned that the government widened its fiscal deficit target for the year starting in April to help finance higher spending in rural sectors and healthcare. The government also imposed a 10 percent long-term capital gains tax for equity investments of more than one year, raising concerns about investors' risk appetite after Indian shares went on a record-setting spree last month.
Government officials have tried to downplay the impact of the tax. Finance and Revenue Secretary Hasmukh Adhia told a post-budget conference organised by an industry lobby group that the rate was "nominal" and India remained a favourable market. He instead attributed the recent selloff in the markets to global cues.
"It is very unfortunate that our move came at a very wrong time because of global markets also going down," he said. Asian shares fell the most in more than a year on Monday as fears of resurgent inflation battered bonds globally, and toppled Wall Street from record highs. The MSCI's index of Asia-Pacific shares outside Japan shed as much as 2 percent in its largest intraday drop since late 2016.
But bonds in India turned relatively more stable, with the benchmark 10-year bond yield rising 2 basis points to 7.58 percent after posting its biggest weekly rise since February 2017 last week. The rupee was trading at 64.0325/0375 per dollar, compared with Friday's close of 64.07.
"Disappointments include budget provisions and lack of buying on small- and mid-caps, even at lower levels. Expect RBI to maintain the rates and its cautious tone during the policy meet this week," said Deepak Jasani, head of retail research at HDFC Securities. The losses were led by index heavyweight Housing Development Finance Corp, which was trading 3 percent lower. Meanwhile, Bharti Airtel Ltd climbed as much as 5 percent after Singapore Telecommunications Ltd said it would raise stake in Bharti Telecom, the holding company for India's biggest mobile carrier.