India’s stock market recorded its worst budget day in six years after the Union Budget 2026 proposed a higher tax to curb F&O trading and new way to tax share buybacks.
The 30-share S&P BSE Sensex fell 1.88%, or 1,546.84 points, to 80,722.94 even as the broader NSE Nifty 50 fell 1.96%, or 495.20 points, to 24,825.45. Fifteen of 16 major sectors ended in the red. The small-caps and mid-caps slid 2.7% and 2.2%, respectively.
While the budget focused on development, “it stopped short of the firepower that could have delivered immediate excitement for markets,” said Trideep Bhattacharya, president and chief investment officer of equities at Edelweiss Asset Management.
The market drifted lower during the session after the government proposed a hike for STT on F&O trading, a move that divided analysts.
“F&O are a margined, risk-managed product and not typically the primary source of retail excess, which raises questions on whether STT will deliver the desired outcome or instead weigh on liquidity,” said Pranav Haridasan, managing director and chief executive officer at Axis Securities.
Stocks in focus after Budget 2026
- BSE Ltd. fell 7.8%, while brokerages Angel One Ltd. and Groww Ltd. dropped 9% and 5.1%, respectively, after the STT hike.
- Nifty PSU Bank slid 5.6% after no fresh divestment-related measures were announced, while defence stocks retreated 5.1%.
- Nifty IT index rose 0.6% after the government said that buybacks would be taxed as capital gains, a move analysts see as favourable for cash-rich tech companies.
- Paytm Ltd. rose 1.9% on enhanced incentives for the UPI.
- Textile stocks Gokaldas Exports Ltd., Arvind Ltd., KPR Mill Ltd., Vardhman Textiles Ltd. jumped 2-11% as the government proposed setting up of mega textile parks.
The absence of significant incentives for foreign investors, who have withdrawn $23 billion from local equities since the start of 2025, also hurt sentiment.
“At a time when India needs to deepen market liquidity and attract global flows, raising frictional trading costs sends the opposite signal,” said Jimeet Modi, founder and chief executive at SAMCO Group.
