MUMBAI: Equity investors lost close to Rs 3.2 lakh crore on Monday after the sensex dropped 793 points—the sharpest fall since October 2018. The index also recorded its second-worst post-budget performance in a decade as markets expressed their disappointment with the government’s decision to tax buyback of equity by companies.Foreign portfolio investors turned net sellers over concerns that a tax on the rich would also apply to FPIs since they invest under the trust route.Besides the tax on buybacks and general negativity over the government decision to increase taxes on the rich, global markets were affected after stronger US jobs data reduced chances of a rate cut by the US Federal Reserve. Emerging markets sentiment also dimmed after Turkish markets crashed following the sacking of its central bank governor.The 30-share sensex tanked 907 points in the intra-day trade before settling at 38,720.6 points, showing a sharp loss of 792.8 points or over 2%. The broader Nifty of the NSE tanked 252.6 points, or 2.1%, to close at 11,558.6 points. The biggest post-Budget decline by the sensex in the last decade was in February 2018, when the benchmark index closed 840 points lower.According to analysts, the tax on share buybacks will discourage companies from announcing buying back their equities. They said buybacks act both as a safety net for shares and add liquidity.The selloff in equities and fears of fewer rate reductions by US Fed, resulted in the rupee losing its three-day gaining streak. The domestic currency declined by 24 paise to close at 68.66 against the US dollar.Among Indian stocks, public sector banks were hit after Punjab National Bank classified Bhushan Power and Steel as a fraud. PNB’s shares closed 11% down after it accused a defaulting borrower Bhushan Power and Steel of a Rs 3,800 crore fraud.HDFC Bank shares closed nearly 3% down over concerns of a slowdown in lending, particularly in consumption segment. Bajaj Finserv shares fell 10% after Sanjiv Bajaj warned that demand was easing with TV sales not picking up despite the cricket World Cup.In the last two sessions, the total erosion in market cap has been over Rs 5 lakh crore. The government’s proposal to get companies to increase public holding to at least 35% of their capital (from 25%) has raised the spectre of equity dilution.“The market fall today was because of concerns over future fund flow into the secondary market and scam revelations at PNB. Hike in surcharge in the Budget will have an adverse impact on high-end consumption, as well as reduce the investible surplus of high-income individuals, whose money was the mainstay of mutual funds, PMSes and the midcap segment. Fears of prolonged slowdown in consumption also caused sell-off in autos and NBFCs linked to the consumption story,” said Amar Ambani, president & research head, YES Securities.