India’s benchmark equity indices tumbled sharply on Sunday afternoon after the Union Budget proposed a steep increase in the Securities Transaction Tax (STT) on commodity futures, triggering a broad sell-off across sectors.
The Budget proposed raising STT on commodity futures to 0.05 per cent from the existing 0.02 per cent. Finance Minister Nirmala Sitharaman also announced that buyback proceeds will now be taxed as capital gains for all categories of shareholders.
After swinging between gains and losses in early trade, the 30-share BSE Sensex briefly bounced back before surrendering all gains during the Budget presentation. The index later plunged 2,370.36 points, or 2.88 per cent, slipping below the psychologically crucial 80,000 level to trade at 79,899.42 in the afternoon.
The 50-share NSE Nifty mirrored the fall, tanking 748.9 points, or 2.95 per cent, to 24,571.75.
Selling pressure was visible across frontline stocks. Bharat Electronics dropped 6.50 per cent, while State Bank of India, HCL Tech, Tata Steel, Asian Paints and Eternal were also among the major laggards, weighing heavily on the indices.
Sun Pharma, Sun Pharma, Kotak Mahindra Bank, and Tata Consultancy Services were the gainers.
"The increase in Securities Transaction Tax (STT), especially in futures and options, is likely to act as a marginal negative for foreign portfolio investor (FPI) flows in the near term, particularly for high-frequency and derivative-focused global funds," Aakash Shah, Technical Research Analyst at Choice Equity Broking, said.
Foreign institutional investors bought equities worth Rs 2,251.37 crore on Friday, according to exchange data.
Asian markets are closed on Sunday due to holidays. US markets ended lower on Friday.
On Friday, the Sensex declined 296.59 points, or 0.36 per cent, to settle at 82,269.78. The Nifty dropped 98.25 points, or 0.39 per cent, to end at 25,320.65.