Indian equity markets witnessed a sharp sell-off on Budget Day after an unexpected hike in the Securities Transaction Tax on derivatives unsettled investors, triggering the worst points-based fall for the Sensex on a budget announcement day.
The BSE Sensex plunged over 1,500 points to close near 80,723, while the NSE Nifty 50 declined by nearly 500 points. The steep fall erased around ₹9.4 lakh crore in investor wealth, marking one of the most severe single-day reactions to a Union Budget in recent years.
Markets remained volatile throughout the special trading session. While benchmark indices initially moved higher during the early part of the Finance Minister’s Budget speech, sentiment reversed sharply after the announcement of higher STT rates, leading to broad-based selling across sectors.
The increase in STT on derivatives raised trading costs for futures and options participants, particularly impacting high-frequency and active traders. The sudden policy move prompted investors to cut exposure, adding pressure to already volatile markets.
Analysts said the sharp reaction highlighted market sensitivity to tax-related changes, especially those affecting liquidity-heavy segments such as derivatives, with investors reassessing risk amid higher transaction costs.
