Sensex crashes 2,100 points: STT hike, buyback tax spook Budget day markets

New Delhi: Indian benchmark indices experienced a volatile "Sunday session" as the BSE Sensex plummeted over 2,100 points, erasing early gains following the presentation of the Union Budget 2026.

While Finance Minister Nirmala Sitharaman unveiled ambitious social infrastructure plans, including a dedicated girls’ hostel in every district, investors reacted sharply to unexpected tweaks in securities and capital gains taxation.

Markets Plunge on Tax Hikes

The initial market optimism, fueled by a ₹12.2 lakh crore capital expenditure commitment, quickly evaporated as details of the tax proposals emerged. The BSE Sensex ended the day near 80,600, down roughly 2.5%, while the NSE Nifty 50 slid below the 24,800 level.

The primary triggers for the sell-off included:

• Securities Transaction Tax (STT): A hike in STT for futures and options (F&O) trades caught the market off guard.
• Buyback Taxation: The government announced that share buybacks will now be taxed as capital gains for all shareholders, a move seen as increasing the tax burden on retail investors.
• Sectoral Impact: Shares of State Bank of India (SBI) and Bharat Electronics (BEL) tumbled between 8% and 10% as profit-booking hit high-valuation PSU and defence stocks.

Education and Health Infrastructure Push

Despite the market's retreat, the budget laid out a long-term roadmap for educational and medical expansion.

Social Infrastructure Highlights:

• Hostel Expansion: The government committed to establishing a dedicated girls' hostel in every district to bridge the gender gap in higher education.
• University Townships: Five new academic hubs will be developed near major industrial logistics centres to align vocational training with industrial demand.
• Medical & Veterinary Growth: A new capital subsidy scheme was introduced to support the creation of veterinary hospitals and diagnostic labs.

Focus on Traditional Medicine

Modernising India’s healthcare footprint was a secondary pillar of the address. Sitharaman announced significant upgrades for Ayush-related pharmacies and dedicated support for the WHO Global Centre for Traditional Medicine in Jamnagar, Gujarat.

Mixed Sectoral Reactions

While the broader market bled, certain sectors found favour:

• Biopharma: Stocks like Sun Pharma and Biocon surged after the announcement of a ₹10,000 crore "Biopharma Shakti" initiative.
• Tourism: Travel stocks, including Lemon Tree Hotels, rallied up to 10% on expectations of increased domestic infrastructure spending.

"The budget balances long-term growth with fiscal discipline," Sitharaman noted, despite the immediate market volatility. The government has set a fiscal deficit target of 4.3% of GDP for the 2026-27 financial year.