SENSEX crashes 1,547 points, NIFTY50 closes below 24,850 as STT hike in Budget 2026 spooks investors sentiment

The Indian equity benchmarks nosedived on Sunday's special budget trading session as hike in Securities Transaction Tax (STT) shook investors' sentiment towards equity markets. The SENSEX plunged as much as 2,827 points from the day's highest level to fall below 80,000 mark and NIFTY50 index touched an intraday low of 24,571 after hitting a high of 25,440 during the session.

The SENSEX dropped 1,547 points to settle at 80,723 and NIFTY50 index plunged 495 points to close at 24,825.

Finance Minister Nirmala Sitharaman while presenting Budget for financial year 2026-27 announced hike in STT for futures and options segment. Finance Minister announced a hike in STT for futures trade from 0.02% to 0.05% and raised the STT on options trade to 0.15%.

Soon after the announcement, NIFTY Capital Markets index, which tracks companies associated with capital markets, fell by over 6% to 4,365 on Sunday afternoon. The benchmark indices fell more than 2% as a primary reaction to the news, but later recouped the majority of the losses to trade with nearly 1% losses.

Defence shares came under selling pressure, and the NIFTY India Defence index dropped 5% as 15% increase in outlay for defence sector failed to enthuse investors.

The government increased its spending on defence to ₹7.85 lakh crore for financial year 2026-27 from previous year Budget estimate of ₹6.81 lakh crore, up 15%.

On the flipside, data centre shares like Anant Raj Industries, E2E Networks and Netweb Technologies shares soared up to 10% after Sitharaman announced a tax holiday till 2047 for foreign companies engaged in providing cloud services by setting up data centre in India. The proposal is being positioned as a step towards strengthening the digital services ecosystem and supporting the growth of local data storage and processing capabilities.

The government, in Budget 2026, highlighted the role of such investments in scaling up India’s digital services landscape.

IT shares ended Sunday's brutal session higher as the government increased the threshold for availing safe harbour for IT services from ₹300 crore to ₹2,000 crore.

Safe Harbour for IT services refer to transfer pricing rules allowing eligible companies to adopt prescribed profit margins to avoid detailed audits.

"The threshold for availing safe harbour for IT services is being enhanced substantially from ₹300 crore to ₹2,000 crore. Safe harbour for IT services shall be approved by an automated rule-driven process without any need for tax officer to examine and accept the application," Sitharaman said while presenting her ninth consecutive Budget.

Sectoral landscape

All the major sector gauges compiled by the National Stock Exchanges, barring the measure of IT stocks, ended with deep cuts. NIFTY PSU Bank index was top sectoral loser, the index tanked 5.6%. NIFTY Bank, Financial Services, Metal, Auto, FMCG, Realty and Oil & Gas indices also fell between 2%-4%.

Broader markets also faced the heat of selling pressure as NIFTY Midcap 100 index dropped 2.24% and NIFTY Smallcap 100 index fell 2.73%.

NIFTY50 top gainers and losers

Bharat Electronics was top loser in the NIFTY50 index, the stock fell 6% to close at ₹422. Hindalco, ONGC, State Bank of India, Adani Ports, Coal India and Jio Financial Services also fell between 4.75%-5.78%.

On the flipside, Wipro, Max Healthcare, TCS, Cipla, Sun Pharma and Infosys were among the notable losers.

The overall market breadth was negative as 2,073 shares ended lower while 1,057 closed higher on the National Stock Exchange.