Sensex falls 250 points, Nifty hits 7-month low even as FM Arun Jaitley seeks to allay fears on taxing returns from share sale

The market fell in early trade amid buzz over government imposing taxes on long-term capital gains from trading in shares.  

While Sensex fell over 250 points or 1 percent to 25,791 points, Nifty fell over 1 per cent or 80 points to 7906 level. Nifty was trading at its seven- month low, its lowest level since May 26, 2016.

PM Narendra Modi on Saturday suggested that people earning from financial markets must make a "fair contribution" to nation building.

On Sunday, finance minister Arun Jaitley said the government does not plan to impose a long-term capital gains tax on income from capital markets.

Except Dr Reddy's, all 29 stocks on the Sensex were trading in the red. Cipla (3.11 percent) and Axis Bank (2.55 percent) were the top losers on the Sensex.

Divi's Labs extended losses for the second consecutive session and hit its new 52-week low of Rs 759, falling 11.62 percent or 100 points. The stock was the top loser on the BSE. On Friday, the stock which opened at 1,101 level, hit a low of Rs 821, its 52-week low. It closed 242 points or 21.87 percent lower in the last trading session.

Gujarat Pipavav Port fell 6 percent to Rs 122.

Market breadth was negative with 281 stocks rising against 1,446 falling on the BSE.

Experts said market is likely to trade in the negative territory till February 1 when Budget will be announced.