The stock market plunged sharply on Sunday after Finance Minister Nirmala Sitharaman announced an increase in the Securities Transaction Tax as part of her Union Budget proposal for the financial year 2026-’27.
Securities Transaction Tax is a direct tax imposed on all transactions of listed securities, such as stocks, mutual funds and derivatives, on recognised stock exchanges.
Sitharaman proposed increasing the tax on equity futures to 0.05% from 0.02%. The tax on the options segment will be raised to 0.15% from 0.1%, announced the finance minister.
Equity futures are contracts obligating buyers to purchase and sellers to sell a specific stock or index at a predetermined price on a future date. Options contracts grant the buyer the right, but not the obligation, to buy or sell a stock at a set price by a specific date.
Following the announcement, the benchmark Sensex tanked to a low of 79,899.42 during the afternoon trade, after reaching 82,726 when the Budget speech had begun.
This marked a slide of 2,828 points, or 3.4%, from the day’s high.
The Nifty plunged to a low of 24,571.75, down 869 points or 3.4% from the day’s high.
At 2.30 pm, the Sensex had recovered to 81,433. The Nifty was at 25,037. The sectoral Nifty Bank index was down 1.8%.
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