India’s benchmark equity indices ended sharply lower on Budget day, as investors reacted negatively to key announcements made during Finance Minister Nirmala Sitharaman’s Union Budget speech. Both the Sensex and the Nifty witnessed sustained selling pressure throughout the trading session, with losses deepening after the Budget was presented.
The S&P BSE Sensex fell 1,546.84 points to close at 80,722.94, while the NSE Nifty50 declined 495.20 points to end the day at 24,825.45. Market participants described the sell-off as one of the weakest Budget day performances in recent years, reflecting subdued investor sentiment.
Analysts attributed the decline to a combination of factors, chief among them a proposed increase in the securities transaction tax (STT) on derivatives, the absence of strong measures to attract foreign capital, and continued selling by foreign institutional investors (FIIs).
Vinod Nair, Head of Research at Geojit Investments Limited, said the Budget aims to strike a balance between growth and fiscal stability, drawing on the strength of consolidated government finances built through reforms over the past few years. However, he noted that these measures could lead to only modest gains in government receipts in the near term, which may have dampened market expectations for further tax and non-tax reforms.
One of the biggest drags on sentiment was the proposed rise in costs associated with futures and options trading. Stocks with high derivatives activity came under particular pressure following the announcement.
Anu Tiwari, Partner and Head of Fintech and FSRP at Cyril Amarchand Mangaldas, said the move was largely anticipated. She pointed out that the increase in STT on futures and options trading aligns with regulatory concerns around high-frequency trading and recent enforcement trends.
While the Budget outlines an optimistic growth trajectory, markets appeared unconvinced. Mr Nair said the government has pegged its outlook on a nominal GDP growth target of 10% for FY26, driven by expectations of stronger domestic demand and the long-term impact of past reforms. However, he cautioned that this outlook faces external risks, including global trade tensions, geopolitical uncertainty and ongoing foreign fund outflows, which continue to weigh on investor confidence.
