Sensex, Nifty tumble as Budget proposes to raise Securities Transaction Tax to 0.05% on commodity futures

Mumbai: Stock market benchmark indices Sensex and Nifty tumbled on Sunday afternoon trade after the Budget proposed to raise Securities Transaction Tax to 0.05 per cent on commodity futures from 0.02 per cent.

The government will tax buyback proceeds for all types of shareholders as capital gains, Finance Minister Nirmala Sitharaman said on Sunday.

After fluctuating in early trade, the 30-share BSE Sensex later bounced back but pared all gains amid the Budget presentation.

It later plunged 2,370.36 points, or 2.88 per cent, to slip below the 80,000-mark to 79,899.42 during the afternoon trade. The 50-share NSE Nifty tanked 748.9 points, or 2.95 per cent, to 24,571.75.

From the 30 Sensex firms, Bharat Electronics tanked 6.50 per cent. State Bank of India, HCL Tech, Tata Steel, Asian Paints, and Eternal were also among the laggards.

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.