New Delhi [India], February 1 (ANI): Indian stock markets tumbled sharply as Union Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 in Parliament on Sunday. While indices had remained largely stable before the Budget, selling pressure intensified as the speech progressed, with markets closing deep in the red.
The Sensex ended at 80,722.94 points, down 1,843.43 points or 2.23%, while the Nifty closed at 24,825.45 points, down 593.45 points or 2.33%.
Ponmudi R, CEO of SEBI-registered online trading firm Enrich Money, said, “Initial optimism faded quickly due to higher transaction costs from the increase in Securities Transaction Tax (STT) on equity derivatives and the absence of strong measures to revive foreign capital inflows. Selling pressure was notable across metals, PSU banks, and index-heavy stocks, while defensive sectors such as healthcare and IT showed relative resilience. A softer rupee and muted FII participation reinforced cautious positioning.”
SBI Securities noted that market sentiment turned sharply negative after Finance Minister Sitharaman announced the STT hike on futures and options, triggering aggressive selling. Anand James, Chief Market Strategist at Geojit Investments, commented, “The increase in STT makes option trades more expensive. While the near-term equity segment may see some drag due to portfolio rebalancing, it is unlikely to fully dissuade speculative activity in the derivatives market.”
The Budget proposed raising STT on futures from 0.02% to 0.05%, while STT on options premium and exercise of options would rise to 0.15% from 0.1% and 0.125%, respectively. Other STT rates on equities remain unchanged. The government justified the hike, noting that the total volume of options and futures transactions is over 500 times the Indian GDP, and the move aims to curb purely speculative activity in the derivatives segment.
STT is levied on every buy or sell transaction in the stock market, including shares, futures, and options, and directly affects trading costs, particularly for frequent traders, hedgers, and arbitrageurs. (ANI)
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