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Informist, Sunday, Feb. 1, 2026

 

By Eshitva Prakash

 

MUMBAI – The increase in securities transaction tax on futures and options transactions proposed by the government in the Budget for the financial year 2026-27 (Apr-Mar) to regulate derivative trading volumes proved to be a negative surprise for market participants and resulted in the sharpest single-day fall in the Nifty 50 index in nine months. Both the benchmark indices were volatile throughout the day's special trading session, as analysts had predicted. The higher estimate for the government's gross borrowing for FY27 also raised fears of a rise in yields on government securities, sending shares of public-sector banks into a tailspin. The failure to address concerns of weak consumption was also worrisome, according to analysts. 
 

The Nifty 50 closed almost 2% lower at 24825.45 points, down 495.20 points. This is the largest single-day fall in the 50-stock index since Apr. 7. The BSE Sensex also shed nearly 2% to end at 80722.94 points, down 1,546.84 points. The India Volatility Index, the market's fear gauge, rose to an over-six-month high of 16.11 points. Barring the Nifty IT, all sectoral indices closed in the red.

 

Hindalco Industries was hit the hardest among Nifty 50 constituents, closing nearly 6% lower. Other metal producers such as Hindustan Copper, Hindustan Zinc, and National Aluminium Co. ended 8-10% lower. This follows a steep decline in prices of precious metals. A recovery in the dollar index and a sell-off triggered by profit-taking led to a slump in prices of silver, copper, and gold, Ajay Kedia, research analyst at Kedia Stocks and Commodities, said. Shares of Muthoot Finance and Multi Commodity Exchange of India, whose portfolios are focussed on financing purchases of and trading in precious metals, also closed 9% and 12% lower, respectively.

 

Sitharaman proposed to raise the securities transaction tax on futures to 0.05% from 0.02% and on options premiums and exercise of options to 0.15% from 0.1% and 0.125%, respectively. At a post-Budget press conference, she said the increase was meant to discourage speculative trading. Market participants were not persuaded by the argument. "India competes for global capital against the US, ASEAN (Association of Southeast Asian Nations) economies, and other emerging markets," Jimeet Modi, founder and chief executive officer at SAMCO Group, said in a note. "At a time when India needs to deepen market liquidity and attract global flows, raising frictional trading costs sends the opposite signal."

 

Shares of capital market companies that facilitate futures and options trading were hit sharply. Analysts expect the tax increase to be negative for capital market companies as it may result in a sharp decline in trading volumes. Foreign investments may also be affected, analysts said. Shares of Angel One ended almost 9% lower. Nuvama Wealth Management declined over 7%, and BSE fell nearly 8%. Billionbrains Garage Ventures closed over 5% lower and Motilal Oswal Financial Services ended over 4% lower after rising almost 4?rlier in the session.

 

Shares of public-sector banks fell after the finance minister said the government will borrow INR 17.20 trillion in FY27 through the sale of dated securities on a gross basis, sharply higher than estimates and up from the revised estimate for FY26 of INR 14.61 trillion. Analysts said yields of government securities would rise, affecting the profitability of state-owned banks.

 

However, the impact of the government's borrowing plan is not expected to be very high and the sharp decline in shares of state-owned banks was triggered mostly by the negative sentiment overall in the market, which increased the selling pressure, a banking analyst from a stockbroking company said. Shares of State Bank of India closed 5.5% lower. Outside the Nifty 50, Indian Bank, Bank of Maharashtra, and Bank of India closed 7-8% lower. The Nifty PSU Bank index closed 5.6% lower.

 

Meanwhile, shares of some healthcare-linked stocks closed higher after the finance minister called for enhancement and development of pharmaceutical manufacturing in India. She proposed a scheme to support states in establishing five regional medical hubs, in partnership with the private sector. "These hubs will serve as integrated healthcare complexes that combine medical, educational, and research facilities," Sitharaman said. Shares of Max Healthcare Institute and Sun Pharmaceutical Industries ended around 2% and 1% higher, respectively. Global Health ended over 6% higher.

 

Information technology companies such as Wipro, Tata Consultancy, and Infosys were also among the handful of companies that ended in positive territory. Sitharaman has proposed a tax holiday up to 2047 for any foreign company that provides services to any part of the world outside India by procuring data centre services in India. Anant Raj ended over 5% higher. The company earned INR 435.70 million from its data centre portfolio during the December quarter. However, the segment accounted for only 7% of its total revenue.

 

Shares of defence companies closed sharply lower despite the proposed increase in defence spending in the Budget for FY27 to INR 5.95 trillion, slightly higher than the expenditure of INR 5.68 trillion in FY26. Investors had expected a bigger jump in the defence budget, especially in the aftermath of "Operation Sindoor" in May, Moneycontrol reported. Bharat Dynamics was the worst-hit stock in the Nifty 200, closing over 10% lower. Garden Reach Shipbuilders & Engineers, Paras Defence and Space Technologies, and Data Patterns all ended 8-10% lower. Barring MTAR Technologies, which ended over 5% higher, all other constituents of the Nifty India Defence index closed in the red, with the sectoral index slumping over 5%.

 

Also, market participants were expecting benefits from a restructuring of income tax slabs, which did not materialise, adding to the negative sentiment in the market. Shares of fast-moving consumer goods companies, whose sales generally depend on higher disposable income, closed in the red. Tata Consumer Products, Nestle India, and ITC all ended around 4% lower.

 

The broader market indices shed more than their benchmark peers. All smallcap indices closed 2-3% lower and all midcap indices closed over 2% down.

 

* Of the Nifty 50 stocks, 7 rose, 33 fell

* Of the Sensex stocks, 4 rose and 26 fell

* On the NSE, 1,054 stocks rose, 2,073 fell, and 100 were unchanged

* On the BSE, 1,699 stocks rose, 2,444 fell, and 173 were unchanged

* Nifty PSU Bank: down 5.2%; Nifty Metal: down 4.1%; Nifty IT: up 0.6%

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BSE                                                 NSE

Sensex: 80722.94, down 1546.84 points or 1.9%       Nifty 50: 24825.45, down 495.20 points or 2%

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S&P BSE Sensitive Index	Nifty 50
Lifetime High: 86159.02 (Dec. 1, 2025)	: Lifetime High: 26373.20 (Jan. 5, 2026)
Record Close High: 85836.12 (Sept. 26, 2024)	: Record Close High: 26328.55 (Jan. 2, 2026)
2026 1st day close: 85188.60 (Jan. 1)	: 2026 1st day close: 26146.55 (Jan. 1)
2026 Closing High: 85762.01 (Jan. 2)	: 2026 Closing High: 26328.55 (Jan. 2)
2026 Closing Low: 80722.94 (Feb. 1)	: 2026 Closing Low: 24825.45 (Feb. 1)
2026 High (intraday): 85883.50 (Jan. 5)	: 2026 High (intraday): 26373.20 (Jan. 5)
2026 Low (intraday): 79899.42 (Feb. 1)	: 2026 Low (intraday): 24571.75 (Feb. 1)
2025 1st day close: 78507.41 (Jan. 1)	: 2025 1st day close: 23742.90 (Jan. 1)
2025 Closing High: 85720.38 (Nov. 27)	: 2025 Closing High: 26215.55 (Nov. 27)
2025 Closing Low: 72989.93 (Mar. 4)	: 2025 Closing Low: 22082.65 (Mar. 4)
2025 High (intraday): 86159.02 (Dec. 1)	: 2025 High (intraday): 26325.80 (Dec.1)
2025 Low (intraday): 71425.01 (Apr. 7)	: 2025 Low (intraday): 21743.65 (Apr. 7)
2024 1st day close: 72271.94 (Jan. 1)	: 2024 1st day close: 21741.90 (Jan. 1)
2024 Closing High: 85836.12 (Sept. 26)	: 2024 Closing High: 26216.05 (Sept. 26)
2024 Closing Low: 70370.55 (Jan. 23)	: 2024 Closing Low: 21238.80 (Jan. 23)
2024 High (intraday): 85978.25 (Sep. 27)	: 2024 High (intraday): 26277.35 (Sept. 27)
2024 Low (intraday): 70001.60 (Jan. 24)	: 2024 Low (intraday): 21137.20 (Jan. 24)
2023 1st day close: 61167.79 (Jan. 2)	: 2023 1st day close: 18197.45 (Jan. 2)
2023 Closing High: 72410.38 (Dec. 28)	: 2023 Closing High: 21778.70 (Dec. 28)
2023 Closing Low: 59288.35 (Feb. 27)	: 2023 Closing Low: 17311.80 (Oct. 17)
2023 High (intraday): 72484.34 (Dec. 28)	: 2023 High (intraday): 21801.45 (Dec. 28)
2023 Low (intraday): 58699.20 (Jan. 30)	: 2023 Low (intraday): 17098.55 (Jan. 17)
2022 1st day close: 59183.22 (Jan. 3)	: 2022 1st day close: 17625.70 (Jan. 3)
2022 Closing High: 63284.19 (Dec. 1)	: 2022 Closing High: 18812.50 (Dec. 1)
2022 Closing Low: 51360.42 (Jun. 17)	: 2022 Closing Low: 15293.50 (Jun. 17)
2022 High (intraday): 63583.07 (Dec. 1)	: 2022 High (intraday): 18887.60 (Dec. 1)
2022 Low (intraday): 50921.22 (Jun. 17)	: 2022 Low (intraday): 15183.40 (Jun. 17)
2021 Closing High: 61305.95 (Oct. 14)	: 2021 Closing High: 18338.55 (Oct. 14)
2021 Closing Low: 46285.77 (Jan. 29)	: 2021 Closing Low: 13634.60 (Jan. 29)
2021 High (intraday): 61353.25 (Oct. 14)	: 2021 High (intraday): 18350.75 (Oct. 14)
2021 Low (intraday): 46160.46 (Jan. 29)	: 2021 Low (intraday): 13596.75 (Jan. 29)
2020 Closing High: 47751.33 (Dec. 31)	: 2020 Closing High: 13981.95 (Dec. 30)
2020 Closing Low: 25981.24 (Mar. 23)	: 2020 Closing Low: 7610.25 (Mar. 23)
2020 High (intraday): 47896.97 (Dec. 31)	: 2020 High (intraday): 14024.85 (Dec. 31)
2020 Low (intraday): 25638.90 (Mar. 24)	: 2020 Low (intraday): 7511.10 (Mar. 24)
2019 High (intraday): 41809.96 (Dec. 20)	: 2019 High (intraday): 12293.90 (Dec. 20)
2019 Low (intraday): 35287.16 (Feb. 19)	: 2019 Low (intraday): 10583.65 (Jan. 29)
2018 High (intraday): 38938.91(Aug. 28))	: 2018 High(intraday): 11760.20 (Aug. 28)
2018 Low (intraday): 32483.8 (Mar. 23)	: 2018 Low (intraday): 9951.9 (Mar. 23)
2017 High (intraday): 34005.37 (Dec. 26)	: 2017 High(intraday): 10515.10 (Dec. 26)

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Rajeev Pai

 

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