On the day the Union Budget 2018 was announced, the markets reacted negatively and that was hardly surprising. The Nifty corrected by over 256 points and the Sensex by over 820 points on Friday, the last trading day of the week. The crash was apparently a direct impact of the tax on long term capital gains that was introduced in the Union Budget 2018. The budget had announced a 10% tax on long term capital gains above Rs.1 lakh on equities as well as equity mutual funds. This impacted the markets in two ways. Firstly, since capital gains will continue to be tax-free only till March 31st, there was a virtual hurry to book profits in the market. Secondly, the initial selling in the morning created panic in the markets as the me-too syndrome appeared to catch on in the market. But markets actually feared that the mid caps and small caps would be the worst impacted by the announcement, which led to the sharp selling on that day.