By Santanu Chakraborty
(Bloomberg) — Indian stocks fell to the lowest level in a month after Prime Minister Narendra Modi hinted at raising taxes
on stock market income. Tax payment from individuals profiting from stock-market investments is low and there’s a need to find ways to ensure levies are raised in a fair, efficient and transparent way, Modi said at an event in Patalganga in Maharashtra on Saturday.
The benchmark Sensex dropped 0.9 percent as of 11:24 a.m. in Mumbai, erasing gains for the year and poised for a second
straight year of declines. The gauge has fallen for nine of the past 11 days amid concern a cash crunch caused by the government invalidating some bank notes will crimp economic growth.
Friday’s trading volume on the NSE Nifty 50 Index was 46 percent lower than the 30-day mean at this time of the day. “Fears of excessive taxation by the government and the cash crunch is leading the market fall,” Chakri Lokapriya, the Mumbai-based managing director at TCG Advisory Services Ltd., which manages about $3 billion, said by phone. Drugmaker Divi’s Laboratories Ltd. slid 10 percent, dropping for a third day; the company plans to respond to U.S.
FDA observations made in an inspection of its plant within the time allowed, it said in response to exchange query on Dec. 23
following a CNBC TV report. Private lender Yes Bank Ltd. dropped 2.5 percent to a six-month low. Hindalco Industries Ltd. was the biggest loser on the NSE Nifty 50 Index while Cipla Ltd. fell most on Sensex. Twenty four of the 30 members on the benchmark S&P BSE Sensex fell.
Overseas investors have sold $421 million of local stocks this month, after a $2.6 billion net outflow in November, as uncertainty over economic growth and corporate profits persisted after India’s decision on Nov. 8 to ban existing high-denomination banknotes.