Indian shares slumped on Friday, as investors were disappointed after the government ended a tax break on certain equity investments.
Finance Minister Arun Jaitley in his budget speech on Thursday announced that the profits exceeding Rs 100,000 from shares held for more than a year will be taxed at 10 percent.
The budget also raised spending concerns after the fiscal deficit target was revised to 3.5 percent for 2018-19 as against the earlier target of 3 percent.
Mirroring the worries, the 10-year bond yield hit fresh 22-month high while the rupee was trading at 64.10, down 0.15 percent from its previous close of 64.03.
The S&P BSE Sensex plunged 2.3 percent to 35,066 while the broader NSE Nifty dropped 2.33 percent to 10,760.
Among the top Sensex laggards, Bajaj Auto fell 5 percent, Bharti Airtel declined 4.6 percent, Axis Bank dropped 4.5 percent while Maruti Suzuki was down 4.4 percent.
Godrej Properties fell 1 percent after it reported a consolidated net profit of Rs25.94 crore in the quarter ended December 31, down from a profit of Rs77.24 crore a year ago.
Market breadth was in the favour of gainers, with about 2 stocks advancing to every 1 stock that declined.
In Asia, shares declined, with Korean and Japanese benchmark indices falling more than 1 percent amid talks of policy tightening in Europe.
U.S. oil rose for a third straight session after a survey showed strong compliance with output cuts by OPEC and others including Russia, offsetting concerns about surging U.S. production.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3 percent and away from a record high, Reuters data showed.