Rs 6 Lakh Crore Shed As Sensex Sinks 1,000 Points, Nifty Below 25,000 After Budget 2026

Indian equity markets came under heavy pressure during the special Sunday trading session after Finance Minister Nirmala Sitharaman announced higher securities transaction tax rates on futures and options as part of the Union Budget 2026.

The announcement triggered an immediate sell-off, with investors reacting sharply to the increased cost of derivatives trading.

By around 12:35 PM, the BSE Sensex had fallen 1,004 points to 81,265, while the Nifty slipped 330 points to trade near 24,990. The broader impact was visible in overall market wealth, as the market capitalisation of BSE-listed companies dropped by nearly Rs 6 lakh crore to Rs 453.87 lakh crore during the session.

Derivatives tax hike rattles market sentiment

Under the Budget 2026 proposals, the securities transaction tax on futures contracts has been raised to 0.05 percent from 0.02 percent. The tax on options premiums has been increased to 0.15 percent from 0.10 percent, while the levy on options exercised has gone up to 0.15 percent from 0.125 percent.

These changes mark a sharp increase in trading costs for derivatives investors. Futures and options have seen rapid growth in recent years and now form a significant part of trading volumes, making the segment particularly sensitive to higher levies.

Exchange and brokerage stocks see sharp declines

Stocks linked closely to derivatives trading faced strong selling pressure. BSE shares slipped to an intraday low of Rs 2,517.30, while Angel One declined to Rs 2,284.70. The moves reflected concerns that higher transaction taxes could slow trading activity in a segment that has become a key earnings driver for stock exchanges and retail brokerages.

The weakness spread across the broader market as well, with heavyweight stocks adding to the downside pressure on benchmark indices.

Heavyweights, broader market deepen losses

Shares of Reliance Industries declined by around 2.5 percent, while State Bank of India fell close to 5 percent during the session. The sell-off was not limited to large-cap stocks, as midcap and small-cap indices also moved lower, falling by about 2 percent and 3 percent respectively, indicating a clear risk-off mood across the market.

What is STT and how it impacts traders

STT, or Securities Transaction Tax, is a direct tax levied by the Government of India on securities transactions. It applies to trades involving shares, derivatives and equity-oriented mutual funds when they are bought or sold on a recognised stock exchange.

In simple terms, whenever an investor buys or sells certain securities, a small tax is charged on the transaction value, regardless of whether the trade results in a profit or a loss.

STT is charged on transactions, not profits

A key feature of STT is that it is charged on transactions and not on profits. This means the tax is applicable the moment a trade is executed, even if the investor ends up making a loss.

STT is applicable only when transactions take place on recognised exchanges, namely the National Stock Exchange and the Bombay Stock Exchange. Off-market transactions do not attract this tax.

The increase in STT announced in Budget 2026 has raised concerns that higher costs could dampen trading activity, particularly in the derivatives segment, which has become a major contributor to overall market volumes.