Indian equity markets witnessed a sharp sell-off on Budget Day, with benchmark indices sliding nearly 2 per cent after Finance Minister Nirmala Sitharaman announced a steep hike in Securities Transaction Tax (STT) on futures and options, unsettling investor sentiment in a special Sunday trading session.

The Sensex closed at 80,723, while the Nifty ended at 24,825, down 495 points, marking the steepest Budget Day decline in six years. The fall reflected disappointment over higher trading costs and the absence of immediate growth or sentiment-boosting triggers for the markets.

Sharp Intraday Volatility As Traders Unwind Positions

Markets were far more volatile during the session. The Sensex plunged nearly 3,000 points from the day’s high to hit an intraday low of 79,899.42, while the Nifty slipped to 24,572, before recovering modestly towards the close.

Traders attributed the sharp swings to rapid unwinding of leveraged positions following the STT announcement. The tax on futures trades was raised to 0.05 per cent from 0.02 per cent, while STT on options premium was increased to 0.15 per cent from 0.10 per cent, significantly raising transaction costs in the derivatives segment that drives daily market volumes.

PSU Banks, Metals Drag As Volatility Spikes

The sell-off was broad-based, extending well beyond frontline stocks. The Nifty Midcap 100 fell about 2 per cent, while the Nifty Smallcap 100 dropped nearly 2.7 per cent, underlining the risk-off mood across the market. Investor anxiety surged, with the India VIX jumping nearly 12 per cent, signalling heightened volatility.

Sector-wise, PSU banks were the worst hit, with the Nifty PSU Bank index tumbling close to 6 per cent, followed by metal stocks, which fell around 4 per cent. Banking and financial services indices declined over 2 per cent each. Among individual stocks, Bharat Electronics, Hindalco and ONGC fell about 6 per cent, while IT stocks offered limited relief, with Wipro, TCS and Max Healthcare gaining around 2 per cent each.