Indian equity benchmarks are set to open the week under pressure after suffering their sharpest Budget Day decline in six years during Sunday’s special trading session.
The BSE Sensex rang the opening bell on Monday below 80,650, falling just over 75 points, while the NSE Nifty50 started the session under 24,750, taking a hit of close to 100 points.
In the pre-open hour, both benchmarks remained nearly flat. Around 9:04 AM, the Sensex slipped 27 points and the Nifty tested 24,800.
Notably, a surprise hike in the Securities Transaction Tax (STT) on derivatives triggered a broad-based sell-off, wiping out significant investor wealth and pushing key indices sharply lower on Sunday.
The steep fall came after Finance Minister Nirmala Sitharaman proposed raising the STT on futures contracts to 0.05 per cent from 0.02 per cent, unsettling traders and institutional participants alike.
Worst Budget Day Fall In Six Years
Reversing early gains, the Sensex plunged 2,370.36 points, or 2.88 per cent, during afternoon trade to breach the 80,000 mark and touch 79,899.42. The benchmark eventually settled at 80,722.94, down 1,546.84 points, or 1.88 per cent on Sunday.
The Nifty declined 495.20 points, or 1.96 per cent, to close at 24,825.45. Stock exchanges had conducted a special trading session on Sunday to coincide with the Union Budget presentation.
The decline marked the worst Budget Day performance since February 1, 2020, when the Sensex had ended 2.42 per cent lower, and the Nifty had dropped 2.51 per cent.
Rs 9.40 Lakh Crore Wealth Erosion
The sharp slide in equities led to a significant erosion in investor wealth. The market capitalisation of BSE-listed companies shrank by Rs 9,40,581.75 crore in a single day to Rs 4,50,61,658.60 crore ($4.90 trillion).
Market unease centred largely on the higher transaction costs arising from the increase in STT on futures and options (F&O), particularly the steeper hike in futures.
Pranav Haridasan, MD and CEO, Axis Securities, said the move comes after last year’s rise in capital gains taxes, cumulatively increasing transaction costs for market participants.
“Futures are a margined, risk-managed product and not typically the primary source of retail excess, which raises questions on whether higher STT will deliver the desired outcome or instead weigh on liquidity, participation and India’s market cost competitiveness,” he noted, adding that these concerns are being voiced by both foreign investors and domestic traders.
Global Cues And Previous Session
Asian and European markets were closed on Sunday due to holidays, while US markets had ended lower on Friday.
Foreign Institutional Investors had bought equities worth Rs 2,251.37 crore on Friday, according to exchange data.
In the previous session on Friday, the Sensex had declined 296.59 points, or 0.36 per cent, to settle at 82,269.78, while the Nifty fell 98.25 points, or 0.39 per cent, to close at 25,320.65.
With the sharp Budget Day correction and concerns over liquidity and FPI participation, markets are likely to remain sensitive to further policy clarifications and global cues as trading resumes today.