Budget 2026: Markets tank 1.35% as FM Nirmala Sitharaman increases STT on derivatives

The benchmark Nifty 50 index declined by 1.35%, trading at 24,988.45 points at 12:40 p.m. during the special session on Sunday (February 1, 2026), after Finance Minister Nirmala Sitharaman increased the securities transaction tax on derivatives trades in the Union Budget for 2026-27.

Follow Union Budget 2026 LIVE update here

The NSE opened flat and remained so for the better part of the one-and-a-half-hour budget speech. Almost all sectoral indices increased, but more than 10 of the 21 sectoral indices on the NSE were trading down, some by more than 1%.

Ms. Sitharaman proposed to raise the Securities Transaction Tax (STT) on futures to 0.05% from the current rate of 0.02%. The STT on options premiums and the exercise of options is proposed to be raised to 0.15% from the present rates of 0.1% and 0.125%, respectively.

The STT hike comes on the back of persistent retail participation in the derivative market, where SEBI reported that 9 out of 10 participants continue to incur losses, and a large share of them are low-income individuals.