Nifty tests 7,900 despite Jaitley’s clarification on long-term capital gains tax

The Nifty50 index was under pressure on Monday, despite Finance Minister Arun Jaitley’s calming the nerves over the capital gains tax. The finance minister on Sunday clarified that the government does not plan to impose a long-term capital gains tax, a day after Prime Minister Narendra Modi suggested that people earning from financial markets must make a “fair contribution” to nation building.

Some market observers interpreted PM Modi’s comments as a pitch for higher taxes on income from capital markets. Mr Jaitley said the Prime Minister’s speech had been misinterpreted. “I wish to absolutely clarify that there is no occasion or opportunity for anybody to reach such a conclusion because this is not what the prime minister said,” Mr Jaitley said.

The Nifty fell below the crucial 7,900 level while the Sensex slumped nearly 300 points. The 7,900 mark is seen a crucial support by many market observers, who say that a decisive move below this level could accelerate the selling pressure.