Indian equities markets Monday started the trading week on a very negative note as reports of India resuming talks on a tax treaty with Mauritius triggered a panic selling.
Over the weekend, a senior Central Board of Direct Taxes (CBDT) official was quoted as having said that India and Mauritius officials are expected to meet soon to work out the details of the new Double Taxation Avoidance Agreement.
India receives over 40 percent of its foreign direct investment through companies and funds registered in Mauritius.
The tax department is seeking to tax gains made by companies registered in Mauritius and operating in India.
The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 18,060.17 points and slipped to an intra-day low of 17,341.38 points, crept up to rule at 17,546.04 points — down 324.49 points or 1.82 percent from its previous close at 17,870.53 points.
The 50-scrip S&P CNX Nifty of the National Stock Exchange was also trading lower at 5,281.7 points, down 1.56 percent.
Broader markets were in the red as well, with the BSE midcap index down 2.99 percent and the BSE smallcap index down 3.11 percent.
The market breadth was negative, with 394 stocks advancing, 2,067 on the decline and 81 remaining unchanged.
There was only one gainer on the Sensex: Hero Honda. Losers included Reliance Infra, Reliance Communications, Cipla and NTPC.
Asian markets too were ruling lower.
The Nikkei of the Japanese stock exchange was flat at 9,348.78 points, while the Hang Seng of the Hong Kong stock exchange was trading 0.42 percent lower at 21,604.32 points.
The Chinese Shanghai composite index moved down 0.94 percent to trade at 2,618.1 points.