Even as the stock market continued its downward slide on Monday, Finance Minister Arun Jaitley said it was not in reaction to the Union Budget or the reimposition of Long Term Capital Gains (LTCG) tax, but due to global factors.

Jaitley's remarks came after the Indian equity markets on Friday witnessed the steepest fall since November 2016, after LTCG tax on equities was re-introduced in the Union Budget for 2018-19, leading the Sensex to shed over 800 points and the Nifty50 over 200 points in a single day.

"It is not due to the Budget or the LTCG. Dow Jones has also fallen by over two per cent," Jaitley told reporters on the sidelines of an event here.

Jaitley was referring to the sharp fall in the US stocks on Friday when Dow Jones Industrial Average lost 665.75 points, or 2.54 per cent, to close at 25,520.96.

The barometer Sensex of the BSE, however, continued its downward slide on Monday and fell by almost 550 points to 34,520 before recovering to some extent. It was trading at 34,737 at 11.15 am.

In the Union Budget on February 1, Finance Minister Arun Jaitley announced a 10% tax on long-term capital gains exceeding Rs 1 lakh. What this meant was, if you have held an investment for over a year and made over Rs 1 lakh on it, you will now have to pay 10% tax. The income received on equity-oriented mutual funds too will be taxed at 10%.

This was an announcement that the Street was fearing and as a reaction to it, the markets fell sharply. With the announcement of LTCG, there are now two types of taxes on equities. The other one being the securities transaction tax (STT), which was introduced as an alternative to LTCG tax on equities. Mutual Funds and equity investments are currently the most lucrative instruments of investment with high returns. 

With IANS inputs