Indian stocks ended lower in the special trading session on Sunday after Finance Minister Nirmala Sitharaman announced a hike in the securities transaction tax (STT) on futures and options in her Budget 2026 speech, triggering a sharp sell-off during the Budget special weekend trading session.
At the end of the day, the BSE Sensex fell 1546.84 points or 1.88% to close at 80,722.94, whereas the Nifty 50 was down 495.20 points or 1.96% to end at 24,825.45.
The market capitalisation of all listed companies on the BSE decreased by Rs 9.72 lakh crore to Rs 450.15 lakh crore.
On the 30-stock Sensex, the shares of SBI, Adani Ports, BEL, ITC and Tata Steel led the losers, falling between 4% and 6%.
IT stocks bucked the trend, with the sectoral index ending 0.6% higher after the Union Budget 2026 proposed changes to the taxation of share buybacks.
The finance minister said proceeds from buybacks would be taxed as capital gains rather than as income, a move seen as supportive for IT companies, which in recent years have been among the most active users of buybacks to return surplus cash to shareholders.
Under the Budget 2026 proposals, the STT on futures contracts will rise to 0.05% from 0.02%, while the tax on options premiums will increase to 0.15% from 0.10%. The levy on options exercised will also climb to 0.15% from 0.125%.
The measures mark a meaningful increase in trading costs for derivatives investors and threaten to curb volumes in a segment that has expanded rapidly in recent years. Futures and options trading has become a key source of revenue for stock exchanges and retail brokerages, making the sector particularly sensitive to the policy shift.
BSE shares slid 8% at the end of the trading day, while Angel One dropped 8.6%, reflecting concerns that higher levies on derivatives trading could dampen activity in a segment that has become a key earnings driver for exchanges and retail brokerages.
“The budget is very, very positive and captures many key announcements, including tax exemptions for foreign investments in data centres till 2047 to provide long-term visibility, and the announcements around ease of doing business in Income Tax and Customs should also go a long way in improving compliance and reducing friction for businesses,” said Amisha Vora, Chairperson & Managing Director, PL Capital.
“The only real negative in the Budget is the increase in STT on derivatives, and that’s what the market is reacting to in the short term. Overall, once the STT headline settles, the Budget should be seen as growth supportive. We would recommend a ‘Buy’,” said Vora.
Losses extended beyond brokerage stocks, with heavyweight constituents such as Reliance Industries and State Bank of India falling about 2.5% and 5%, respectively, adding to the drag on benchmark indexes.
While this budget may not be characterised as transformative, it reflects the Finance Minister and her team’s continued pragmatic approach to economic management, said Dhiraj Relli, MD & CEO at HDFC Securities, adding that “while the enhanced STT regime may create near-term headwinds for capital market participants, it reflects a long-term vision for market stability and maturity. This trade-off should ultimately benefit the broader financial ecosystem.”
Overall, this was a stable and fiscally disciplined Budget, said Amar K Ambani, Executive Director at YES Securities, adding that “It met fiscal deficit targets broadly along expected lines, maintained government capex at elevated levels, and reiterated a commitment to controlling market borrowings, with nominal GDP growth assumptions of around 10%, along expected lines. Market disappointment was largely confined to the unexpected STT hike, which overshadowed an otherwise steady and predictable policy outcome.”
The selloff was broad-based, with the small-cap and midcap indexes sliding about 3% and 2%, reflecting the risk-off tone across the market.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
