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New Delhi: Investors' wealth eroded sharply by Rs 9.40 lakh crore on Sunday as markets went into a tailspin falling nearly 2 per cent after Finance Minister Nirmala Sitharaman proposed an increase in the Securities Transaction Tax (STT) on derivatives.
Reversing early gains, the 30-share BSE Sensex tumbled 2,370.36 points or 2.88 per cent to slide below the 80,000-mark at 79,899.42 in afternoon trade after Sitharaman said the STT on futures contracts would be raised to 0.05 per cent from 0.02 per cent.
The benchmark gauge ended at 80,722.94 down 1,546.84 points or 1.88 per cent.
Earlier on February 1, 2020, the 30-share BSE benchmark had ended 987.96 points or 2.42 per cent lower.
Tracking the sharp fall in equities, the market capitalisation of BSE-listed companies eroded by Rs 9,40,581.75 crore to Rs 4,50,61,658.60 crore (USD 4.90 trillion) in a single day.
"On the flip side, the hike in STT on futures and options—futures to 0.05 per cent (from 0.02 per cent) and options premium/exercise to 0.15 per cent (from 0.1per cent/0.125per cent)—is a negative for active traders and the derivatives ecosystem. It raises transaction costs, potentially curbing speculative volumes, impacting liquidity in F&O, and contributing to immediate market pressure.
"While aimed at moderating excessive derivatives activity and boosting revenue, it could dampen retail participation in a bull phase and affect broking revenues short-term," Ashwani Dhanawat, Executive Director and Chief Investment Officer, Shriram General Insurance, said.
In her Budget speech for 2026-27, Sitharaman said the STT on futures contracts would be raised to 0.05 per cent from 0.02 per cent.
"STT on options premium and exercise of options are both proposed to be raised to 0.15 per cent from the present rate of 0.1 per cent and 0.125 per cent respectively," she said.
"Budget 2026 stays the course on growth while signalling fiscal prudency. The measured increase in STT on futures and options reflects a clear intent to curb excessive speculation, fostering a more stable market and encouraging sustainable participation from long-term retail and institutional investors.
"The continued emphasis on capex, manufacturing, services, and infrastructure provides visibility for revival of long-term private investment, particularly across MSMEs, tourism, and export-oriented sectors, which markets value more than short-term stimulus," Vishal Kampani, Vice Chairman and Managing Director, JM Financial Ltd, said.
From the 30 Sensex firms, State Bank of India tanked 5.61 per cent, while Adani Ports lost 5.53 per cent. Bharat Electronics, ITC, Tata Steel, UltraTech Cement and Reliance Industries were also among the laggards.
Tata Consultancy Services, Infosys, Sun Pharma and Titan were the gainers. Among indices, BSE PSU Bank dived 5.60 per cent, metal tanked 3.85 per cent, commodities (3.35 per cent), energy (3.14 per cent), capital goods (3.02 per cent), utilities (2.98 per cent), industrials (2.66 per cent) and power (2.52 per cent).
IT and BSE Focused IT were the winners.
A total of 2,375 stocks declined while 1,759 advanced and 175 remained unchanged on the BSE.