Mumbai: Indian stock markets witnessed a sharp fall on Budget Day as investors reacted negatively to the government’s decision to raise the Securities Transaction Tax (STT) on futures and options trading.
The benchmark indices Sensex and Nifty recorded their biggest Budget-day decline in six years, with both ending around 2 per cent lower in a special trading session held on February 1.
By the end of the session, the Sensex closed at 80,723, while the Nifty settled at 24,825, losing 495 points or nearly 2 per cent.
Markets were far weaker during the day, with the Sensex plunging almost 3,000 points at one stage to hit an intra-day low of 79,899.42.
The Nifty also slipped sharply to a low of 24,572 before recovering slightly.
“The market’s reaction has been negative, primarily due to low expectations, limited outlays and the negative bias created by the increased Securities Transaction Tax (STT) for futures, triggering a knee-jerk response,” an expert stated.
The sell-off came after Finance Minister Nirmala Sitharaman announced higher STT rates during her Budget 2026 speech.
The tax on futures trades was increased to 0.05 per cent from 0.02 per cent, while STT on options premium was raised to 0.15 per cent from 0.1 per cent.
These steep hikes triggered heavy selling, especially in stocks linked to trading and financial activity.
The broader market also remained under strong pressure. The Nifty Midcap 100 index fell 2 per cent, while the Nifty Smallcap 100 dropped 2.7 per cent, showing that selling was not limited to large-cap stocks.
Investor fear rose sharply as India VIX, which measures market volatility, jumped nearly 12 per cent, reflecting high nervousness.
Sector-wise, almost all indices ended in the red except the IT sector. Public sector bank stocks were hit the hardest, with the Nifty PSU Bank index tumbling nearly 6 per cent.
Metal stocks also suffered heavily, falling about 4 per cent. Banking and financial services stocks declined by over 2 per cent each.
Among the Nifty companies, Bharat Electronics, Hindalco and ONGC were the worst performers, each falling around 6 per cent.
Other major stocks such as SBI, Coal India, Jio Financial Services, Nestle India, ITC and Tata Consumer Products also closed lower.
On the positive side, IT stocks provided some relief, with Wipro, TCS and Max Healthcare gaining around 2 per cent each.
(IANS)
