Stock market crash after Budget 2026 speech

Stock market crash after Budget 2026 speech: Finance Minister Nirmala Sitharaman‘s Union Budget speech has spooked stock markets, with both Nifty50 and BSE Sensex, crashing over 1% in the special trading session being held. While Nifty50 went below 25,000, BSE Sensex tanked over 1,600 points before recovering. Investors reacted negatively to a hike in Securities Transaction Tax (STT) on futures and options (F&O) trades announced by FM Sitharaman.“I propose to raise the STT on Futures to 0.05 percent from present 0.02 percent. STT on options premium and exercise of options are both proposed to be raised to 0.15 percent from the present rate of 0.1 percent and 0.125 percent respectively,” she announced.

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The announcement on STT sparked aggressive selling, particularly in stocks associated with trading, broking, and market activity, as stock market participants reassessed the increased cost of operating in the derivatives segment.What is STT? It is a government-imposed levy on every buy and sell transaction in the equity market, covering shares as well as futures and options. Though the tax may seem small in percentage terms, it directly adds to transaction expenses, especially affecting active traders, hedgers, and arbitrage participants.Market participants noted that the announcement came at a time when equities were already grappling with volatility and selling pressure. The abrupt increase in transaction costs intensified concerns, triggering a widespread sell-off across sectors.Commenting on the development, Shripal Shah, Managing Director and CEO of Kotak Securities, said the steep increase in STT could dampen derivatives activity. He noted that the sharp hike in futures and options taxes, following last year’s increase, is likely to raise impact costs for traders, hedgers, and arbitrageurs, potentially cooling trading activity and reducing volumes.Shah added that the government’s objective appears to be curbing excessive trading rather than maximising revenue. Any additional revenue from higher STT, he said, could be offset by lower derivatives volumes as higher costs discourage participation.With markets already under strain, the latest Budget proposal is being viewed as an added near-term downside risk for equities.