The Bombay Stock Exchange Sensex ended 233.60 points lower at 25,807.10 and the National Stock Exchange Nifty fell by 77.50 points to end at 7,908.25 as markets reacted sharply to fears of a capital markets tax on Monday. According to experts, Prime Minister Narendra Modi’s remark on Saturday that people earning from financial markets must make a “fair contribution” to nation building triggered fears of such a tax. However, Union Finance Minister Arun Jaitley on Sunday said the government has no such plans, and that Modi was misinterpreted.

The Nifty also ended at a seven-month low, and the BSE Midcap and Smallcap indices fell by 2.17% and 2.10%, according to Business Standard. Metal and realty stocks were the worst affected, with their indices falling by 3% and 3.64%. Metals and real estate companies such Hindalco, Vedanta, Hindustan Zinc and DLF were the among the top losers of the day.

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Vice-President at Geojit BNP Paribas Gaurang Shah said the fall in markets was a “knee-jerk reaction” to Modi’s comments, NDTV reported. Markets opened on a grim note on Monday with the Sensex plummeting almost 300 points during the day, and the Nifty50 trading below the crucial 7,900-level.

“Short-term outlook for the market remains negative till Nifty trades below 8,275 levels. Traders should use any kind of rise or consolidation to sell till trend reverses,” independent market consultant Devang Shah told Business Standard. Analysts said that overall, the markets are likely to remain dull this week, keeping the year-end holidays in mind. However, market expert Ajay Bagga told NDTV that the government announcement after the December 30 deadline for demonetisation would impact the market.

Although major Western markets were shut on Monday for Boxing Day, Asian markets got a mixed response. China’s Shanghai Composite index fell 0.84% to 3,279 in the morning while Japan’s Nikkei fell 0.09% to 19,412.