Weak corporate earnings coupled with worries about the Centre’s stand on retrospective taxation made foreign investors jittery, and they turned net sellers on Monday. The benchmark indices fell nearly two per cent. The Sensex lost 556 points (1.95 per cent) to close at 27,886.21 while the broader Nifty ended at 8,448.10, down nearly 158 points (1.83 per cent). The mid- and small-cap indices took even bigger hits, crashing over two per cent.

Analysts believe that while the fourth-quarter results last week by TCS and Reliance Industries, the two largest listed companies by market capitalisation, disappointed investors, the Government’s combative position on existing retrospective tax claims have spooked foreign investors. In addition, global financial services firm UBS cut its December 2015 Nifty target from 9,600 to 9,200, reflecting lowered earnings expectations.

Foreign institutional and portfolio investors sold securities of over ₹7,460 crore in the open market. Domestic institutions took the opportunity to buy over ₹2,300 crore of securities.

Hitesh Agrawal, Head, Research, Reliance Securities, said, “With today’s fall, the Sensex has lost over 1,200 points in the last four trading sessions, primarily on account of the nervousness surrounding the March quarter earnings season, which has witnessed a shaky start.

“While the expectations from the results are already low, concerns with respect to the delayed recovery in corporate earnings in the backdrop of a slower-than-expected economic recovery have also overtaken sentiments in the short-term.”

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