Markets gave thumbs-down to finance minister P Chidambaram's Budget 2013-14, with BSE benchmark Sensex nosediving 291 points to close below 19,000 level as FII tax issues and new surcharge on domestic corporates left investors disappointed.
After a higher start, the Sensex tumbled by 290.87 points, or 1.52% to settle at 18,861.54, its lowest level since November 27.
In a volatile trade, the gauge recorded its second biggest loss this month after February 21 when it tumbled 317 points.
Similarly, the National Stock Exchange index Nifty dropped by 103.85 points, or 1.79% to 5,693.05.
"It is a bit frustrating to see a new set of concerns on FII taxation which could cause uncertainty unless quickly resolved," said Sandeep Nanda, CIO, Bharti AXA Life Insurance.
Banking stocks led by State Bank of India suffered heavy losses on concerns a liquidity in the banking system after the government set its target for gross market borrowing at Rs. 6.29 trillion this fiscal was less than the market expectations.
The sentiment turned bearish on hike in some taxes despite reduction in Securities Transaction Tax and a higher global trend. Auto stocks were also down as the government announced hiking excise duty on luxury cars and their parts.
Stocks of SBI dropped by 5.80% to Rs. 2,085.40 and ICICI Bank by 3.86% to Rs. 1,040.30. HDFC Bank lost 2.67 per cent to Rs. 625.60 and HDFC Ltd by 2.32% to Rs. 760.40.
In auto sector, Maruti Suzuki fell by 3.74% to Rs. 1,356.65, Mahindra and Mahindra by 2.27% to Rs. 871.05 and Hero MotoCorp by 0.32% to Rs. 1,667.80.