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    Budget Day Sell-off Drags Markets Lower as Over 200 Stocks Hit 52-Week Lows on NSE

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    Indian equity markets witnessed a sharp sell-off during the special Budget Day trading session, with benchmark indices ending significantly lower and more than 200 stocks touching their 52-week lows on the National Stock Exchange (NSE). The decline followed announcements in Union Budget 2026 related to higher taxes on derivatives trading, which unsettled investor sentiment and triggered widespread profit booking.

    The NIFTY50 closed 495 points, or 1.9%, lower at 24,825 after hitting an intraday low of 24,571. The BSE SENSEX fell 1,546 points, or 1.8%, to settle at 80,722, having slipped below the 80,000 mark during the session. The fall snapped a three-day winning streak for both indices.

    Market participants reacted negatively after Finance Minister Nirmala Sitharaman announced an increase in the Securities Transaction Tax (STT) on futures and options (F&O) trading. While the move is aimed at curbing excessive speculation, traders said it raised transaction costs and dampened near-term sentiment in the derivatives-heavy market.

    STT Hike Triggers Volatility

    As per the Budget proposals, STT on futures contracts will rise to 0.05% from the earlier 0.02%. The tax on options premiums and the exercise of options has been increased to 0.15%, up from 0.1% and 0.125%, respectively. Market experts noted that higher STT directly impacts active traders by increasing per-trade costs, particularly in the F&O segment, which has seen rapid growth in recent years.

    Reflecting heightened uncertainty, the India VIX — a measure of market volatility — jumped over 10% to around 15.10.

    Over 200 Stocks Hit 52-Week Lows

    The sell-off was broad-based. Shares of several well-known companies touched their lowest levels in the past year. Among the prominent names were ITC, IRCTC, IREDA, Patanjali Foods, SBI Cards, Premier Energies and Indian Hotels.

    Data showed that several of these stocks have already suffered steep corrections over the last year. IREDA, ITC and Premier Energies, for instance, have declined between 23% and 36% on a one-year basis. Other stocks such as Godrej Properties, KPIT Technologies, L&T Technology Services and Exide Industries also hit fresh annual lows during the session.

    In total, only six stocks in the NIFTY50 managed to close in the green, while 44 constituents ended the day with losses.

    Sectoral Performance

    Sectoral indices reflected the risk-off mood. PSU bank stocks were the worst hit, with the NIFTY PSU Bank index falling over 5%. Metal stocks declined around 4%, while the NIFTY Financial Services index dropped more than 3%. The IT sector was the lone outperformer, ending marginally higher as investors sought relative stability.

    Among individual NIFTY50 stocks, Bharat Electronics, Hindalco and ONGC were among the biggest losers. On the other hand, select IT and healthcare stocks such as Wipro, TCS and Max Healthcare posted gains, offering limited support to the market.

    Why Markets Fell

    Ahead of the Budget, equity markets had been trading higher on expectations of growth-oriented announcements. However, the increase in STT altered the risk-reward equation for traders, particularly those active in derivatives. Analysts said that the sudden change prompted investors to book profits and reduce leveraged positions.

    Market watchers added that while the intent behind the tax hike may be to stabilise markets in the long run, the immediate impact has been negative, especially for liquidity and sentiment in the F&O segment.

    Outlook

    Experts believe that markets may remain volatile in the near term as participants reassess the implications of higher transaction costs and other Budget measures. Attention is likely to shift to corporate earnings, global cues and clarity on policy execution in the coming sessions.

    For now, the Budget Day crash has underscored investor sensitivity to changes in market-related taxes, with the sharp fall serving as a reminder of how policy signals can swiftly reshape market sentiment.

     
     
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