Budget 2026: Markets tank 1.35% as FM Nirmala Sitharaman increases STT on derivatives

The benchmark Nifty 50 index declined by 1.35%, trading at 24,988.45 points at 12:40 p.m. during the special session on Sunday (February 1, 2026), after Finance Minister Nirmala Sitharaman increased the securities transaction tax on derivatives trades in the Union Budget for 2026-27.

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The NSE opened flat and remained so for the better part of the one-and-a-half-hour budget speech. Almost all sectoral indices increased, but more than 10 of the 21 sectoral indices on the NSE were trading down, some by more than 1%.

From the 30 Sensex firms, Bharat Electronics tanked 6.50 per cent. State Bank of India, HCL Tech, Tata Steel, Asian Paints, and Eternal were also among the laggards. Sun Pharma, Sun Pharma, Kotak Mahindra Bank, and Tata Consultancy Services were the gainers.

Ms. Sitharaman proposed to raise the Securities Transaction Tax (STT) on futures to 0.05% from the current rate of 0.02%. The STT on options premiums and the exercise of options is proposed to be raised to 0.15% from the present rates of 0.1% and 0.125%, respectively.

The STT hike comes on the back of persistent retail participation in the derivative market, where SEBI reported that 9 out of 10 participants continue to incur losses, and a large share of them are low-income individuals.