Elevated STT tax jitters drags Nifty significantly lower on Budget day

01 Feb 2026 Evaluate

Indian equity benchmark --Nifty-- ended significantly lower on Sunday. After a flat-to-positive start, index remained lackluster during early morning deals. But soon, market recovered to trade with marginal gains as some support came with Commerce and Industry Minister Piyush Goyal’s statement that the negotiations for a proposed bilateral trade agreement between India and the US are progressing, and both countries are working to close the deal quickly. However, in afternoon session, index entered into red terrain and intensified its losses as Finance Minister Nirmala Sitharaman raised Securities Transaction Tax (STT) on F&O in Budget 2026-27. The STT raised to 0.05 per cent from 0.02 per cent of the transaction value, making futures trades slightly more expensive. As a result, market witnessed huge selloff in broking stocks. Further, sentiment remained downbeat amid the government’s decision to tax share buyback proceeds as capital gains for all categories of shareholders. Index continued its weak trade in red till the end of the session. Finally, Nifty ended below 24,850 mark.

Most of the sectorial indices ended in red except IT stocks. The top gainers from the F&O segment were Amber Enterprises India, Delhivery and One 97 Communications. On the other hand, the top losers were Multi Commodity Exchange of India, Bharat Dynamics and Hindustan Zinc. In the index option segment, maximum OI continues to be seen in the 25400 - 25600 calls and 24900 - 25100 puts indicating this is the trading range expectation.

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