Banking, pharma pull Sensex down 167 pts

Although the market was volatile, the sharpest movement came only in late trading. In early trade, the market had lost ground after a strong opening that was triggered by firm Asian markets and data showing rising flows from FIIs. The S038;P CNX Nifty lost 56.20 points 1.3 per cent to 4,040.

Marketmen ignored the finance minister8217;s statement that inflation might moderate as supply shortages ease in the coming days. The market is worried about more steps by the government to cool off rising prices. Dealers were also nervous about reports that the I-T department raided some brokers 8212; a rumour denied by the Central Board of Direct Taxes.

Concerns that the government may raise short-term capital gains tax on sale of shares from the current 10 per cent in the coming Budget have gained currency. 8220;Securities transaction tax may also go up further. The STT was raised in the previous budget. The removal of 10 per cent corporate surcharge may be offset by removal of certain open-ended exemptions. The finance ministry may give a big impetus to agriculture and infrastructure in the budget,8221; said a dealer.