The Union Budget delivered a major shock to Indian stock markets, leaving investors rattled. New tax proposals announced during the budget presentation triggered heavy selling pressure across key indices. As a result, markets witnessed one of the sharpest budget-day declines in recent times.
STT Hike and Buyback Tax Hit Investor Sentiment
The government’s decision to increase the Securities Transaction Tax (STT) on futures trading and impose taxes on company buybacks unsettled market participants. Soon after the announcement, selling intensified. At one stage, the Sensex crashed by over 2,000 points, reflecting panic-driven exits.
Markets Close Deep in the Red
By the end of the special Sunday trading session, the Sensex fell sharply by 1,546 points and settled at 80,722. Meanwhile, the Nifty dropped 495 points to close at 24,119. Although markets opened flat before the budget speech, sentiment turned negative immediately after the STT proposals surfaced.
What Changed in STT and Buyback Rules
STT on futures trading rose from 0.02 per cent to 0.05 per cent. In addition, the STT on options premium increased to 0.15 per cent. The budget also classified share buybacks as capital gains. To curb misuse, the government proposed higher taxes on buybacks, imposing 22 per cent on corporate promoters and 30 per cent on non-corporate promoters. These measures severely dented investor confidence.
Brokerage Stocks Face Heavy Selling
Brokerage firms bore the brunt of the sell-off. Shares of Multi-Commodity Exchange plunged over 18 per cent on the BSE. Groww’s parent firm, Billion Brain Garage Ventures, dropped 13 per cent. Similarly, IIFL Capital fell over 10 per cent, while Angel One and Anand Rathi stocks also recorded steep losses. Even BSE Ltd faced pressure, losing nearly 15 per cent on the NSE.
A Black Sunday for Investors
Despite it being a Sunday, markets remained open due to the budget. However, instead of relief, investors faced a “Black Sunday,” as tax changes overshadowed all positive cues and pushed indices into deep losses.
