Indian equity markets witnessed a sharp sell-off on Sunday after a key announcement in the Union Budget 2026 rattled investor sentiment. The Sensex plunged 1,546.84 points by the close, while the Nifty50 slipped 495.20 points, or nearly 2%, as traders reacted to a hike in Securities Transaction Tax (STT) on Futures and Options (F&O) trading.
Finance Minister Nirmala Sitharaman, during her Budget speech, proposed increasing STT on futures from 0.02% to 0.05% and on options from 0.1% to 0.15%. The move, aimed at boosting government revenue, immediately spooked the market, particularly brokerage and trading-linked stocks that rely heavily on derivatives volumes.
Shares of Multi Commodity Exchange (MCX) crashed over 18%, while Angel One fell nearly 12%. IIFL Capital Services, Groww’s parent company Billionbrains Garage Ventures, and Anand Rathi Share and Stock Brokers also saw steep losses, reflecting fears of reduced trading activity due to higher transaction costs.
Market experts said the STT hike makes frequent and high-volume trading more expensive, which could dampen derivatives participation. Analysts also warned that the move may discourage foreign portfolio investors (FPIs), especially global funds focused on high-frequency and derivatives trading.
However, not all sectors ended in the red. Stocks linked to data centers and cloud infrastructure gained after the Budget announced a tax holiday for foreign companies offering global cloud services from India-based data centers until 2047. Anant Raj Ltd. surged over 14% during the session.
Other Budget proposals, such as plans to develop India as a biopharma manufacturing hub, set up mega textile parks, strengthen ship-repair ecosystems, and promote seaplane services, supported select stocks. Raymond and Trident rose more than 8% at their peak, while electronics manufacturers like Dixon Technologies and Amber Enterprises posted gains. Shipping stocks, including Shipping Corporation of India, also advanced.
Overall, while the Budget offered long-term growth cues, the immediate impact of the STT hike overshadowed positives, triggering one of the sharpest single-day market falls linked to a policy announcement this year.
