The Sensex and Nifty – the Indian stock market indices – tumbled on Sunday after Finance Minister Nirmala Sitharaman proposed to raise the securities transaction tax on commodity futures and options (F&O) trading in her Union Budget 2026 speech.
Finance Minister Nirmala Sitharaman displays the digital tablet encased in a traditional red ‘bahi-khata’ style pouch on the Parliament premises ahead of the presentation of the Union Budget 2026-27 (PTI).The Sensex closed down 1546.84 points, recovering slightly from a fall of 1700 points after the announcement. STT hike. The NSE was down 495.20 points (-1.96 percent) at 24,825.45.
Why today BSE Sensex, Nifty 50 crashed?Leading the stock market rout on Sunday were shares of brokerage-related companies that fell 18 percent after Finance Minister Nirmala Sitharaman proposed raising securities transaction tax on commodity futures and options.
On BSE, shares of Multi Commodity Exchange (MCX) fell 18.08 percent. ₹2,068.40, while BillionBrain Garage Ventures, the parent company of Grow, fell 13 percent. ₹154, and IIFL Capital Services fell 10.4 percent ₹296.10 each, according to data cited in a PTI news agency report.
Angel One stock fell 11.84 percent ₹2,237.95, and Anand Rathi shares and stock brokers depreciated by 8.05 percent. ₹532.15.
Meanwhile, the proposal to offer tax holiday for foreign companies providing global cloud services from India-based data centers till 2047 was a boost for cloud infrastructure companies. Shares of Anant Raj Ltd, which invests heavily in data centers, rose as much as 14.2 percent, according to a Bloomberg report.
What does increase in STT mean in F&O trading?Finance Minister Nirmala Sitharaman It announced an increase in STT (Security Transaction Tax) on futures from 0.02 percent to 0.05 percent and STT on options from 0.1 percent to 0.15 percent.
F&O trading refers to futures and options. A future is a promise to buy or sell an asset at a set price at a future date. An option gives the trader the right, but not the obligation, to trade the asset at a specified price. These instruments allow for high leverage, meaning traders can control large positions with relatively small capital, but they carry significant risk.
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STT is a government tax levied on market transactions, so this increase directly increases costs for traders, especially those who trade frequently or in large volumes.
Finance Minister’s announcement makes futures trade slightly more expensive. A Extending STT option means Govt The securities transaction tax charged on option trades has increased, which increases the cost of buying or selling options in the stock market.
According to analysts, the move is aimed at raking in additional revenue but traders see it as a potential detriment to market volume.
“The increase in STT, especially in futures and options, may act as a marginal negative for foreign portfolio investor (FPI) inflows in the near term, especially for high-frequency and derivative-focused global funds,” PTI quoted Akash Shah, technical research analyst at Choice Equity Broking as saying.
The government will tax buyback proceeds for all types of shareholders as capital gains, announced FM Sitharaman.
