Mumbai: The Nifty fell 2 percent on Tuesday, giving up its entire gain in the previous session, as stocks across the board declined on worries that key land acquisition and tax reforms would be delayed further.
Forty-seven stocks of the 50 that make up the broader index fell on media reports that the government has agreed to send the Land Acquisition Bill and the Good and Services Tax Amendment to a panel for further views, unnerving foreign investors about likely delays.
Also, the rupee trading below the key 64 per U.S. dollar level is raising worries that foreign portfolio outflows may create a vicious cycle between rupee and domestic shares, fund managers said.
Overseas investors have sold nearly $2 billion worth of cash shares in the last 15 sessions, excluding Japan`s Daiichi Sankyo`s block sale of Sun Pharmaceutical Industries shares.
"The delay in land reforms would be a setback amid the current mood," said U.R. Bhat, managing director at Dalton Capital in Mumbai.
Outflows from debt and equities due to changing economic equations are also a big worry, he added.
The Nifty lost as much as 2 percent, while the benchmark Sensex fell 1.9 percent.
Caution also prevailed ahead of factory output growth and retail inflation data due later in the day. Industrial production (IIP) rose 2.8 percent annually in March, slowing from February`s three-month high of 5.0 percent, a Reuters poll of economists found.
Losses also tracked Asian stocks as barely perceptible progress on talks between debt-strapped Greece and its creditors kept investors edgy.
India VIX, a gauge of expected volatility in Indian shares, jumped 9 percent.
However, investment banks are again getting enthused about local stocks after a more than 12 percent fall from record highs hit in March.
Macquarie said on Friday markets were nearing bottom and it was an ideal time to go long, while Nomura said a recovery in the investment cycle was six-nine months away.
ICICI Bank fell 3.3 percent, while Housing Development Finance Corp lost 2.3 percent.
Reliance Industries was down 2.9 percent and Infosys fell 2.1 percent.
