Indian shares slumped 2% on Monday, their biggest fall so far this year, as investors were disappointed after the federal budget raised import tariffs on many items, hiked taxes on the rich and proposed changes in shareholding norms.

Finance Minister Nirmala Sitharaman on Friday proposed increasing the minimum public shareholding in listed companies to 35% from 25%, threatening a wave of new issuance.

"The investor community is disappointed with the budget and there will likely be short-term money exiting the market," said Sunil Sharma, chief investment officer, Sanctum Wealth Management.

The broader NSE index finished 2.14% lower at 11,558.60, while the benchmark BSE index closed down 2.01% at 38,720.57. Both the indexes posted their lowest close in seven weeks.

The selloff was widespread with 46 of the 50 stocks in the Nifty 50 index in the red, with Eicher Motors Ltd and Bajaj Finserv Ltd dropping the most.

The NSE did not immediately respond to a Reuters request for comment, while the BSE was not immediately available for a response.

"Markets are voicing their disappointment in the lack of anything in the budget for the consumer," said Sharma.

Indian stock markets have rallied this year, spurred by the reelection of Prime Minister Narendra Modi. The NSE index is up 6.41% so far this year, while the BSE has gained 7.35%.

Broader Asian stocks also slumped on Monday, with MSCI's broadest index of Asia-Pacific shares outside Japan shedding over 1%, after strong US jobs data tempered hopes of hefty US Federal rate cuts.

The auto index tumbled to its lowest in over 3 years and settled 3.26% down.

Hero MotoCorp Ltd fell as much as 6.06% to its lowest since September 2015, while Maruti Suzuki India closed at its lowest in over two years.

Punjab National Bank (PNB) fell as much as 8.19% after the state-owned lender said it had flagged a borrowing fraud of 38.05 billion rupees ($554.83 million) in Bhushan Power & Steel Ltd's account to the country's central bank.