The Indian stock market experienced a turbulent day following the presentation of the Union Budget 2026, with the Sensex and Nifty indices undergoing a significant correction. The Sensex, the benchmark index of the Bombay Stock Exchange (BSE), initially tumbled over 1,200 points, while the Nifty 50, representing the National Stock Exchange (NSE), recorded its worst post-Budget slide since 2020.
The market opened on a cautious note on the special Sunday trading session, with both indices already indicating a lower start as investors braced for the budget announcements. Initial volatility saw the Sensex fluctuate in a narrow range before experiencing a sharp decline during and after the Finance Minister's budget speech. At 12:45 PM, the Nifty was down 1.79% at 24,965.05, and the Sensex was down 1.54% at 81,294.28. While the Sensex rebounded to trade approximately 600 points lower, and the Nifty50 settled to a loss of 211.35 points at 25,109.30, the overall sentiment remained cautious.
Several factors contributed to the market's negative reaction. One key announcement that triggered selling pressure was the proposed increase in the Securities Transaction Tax (STT) on commodity futures, which was raised from 0.02% to 0.05%. This move is expected to raise trading costs for commodity derivatives, impacting turnover and overall trading sentiment in the futures segment.
Sector-wise, metals, finance, and FMCG stocks were among the biggest losers during midday trade. Companies like HINDALCO, SHRIRAMFIN, and NESTLEIND experienced significant declines. However, some sectors showed resilience. IT stocks rose after the Finance Minister announced a tax holiday until 2047 for foreign companies establishing data centers in India to provide cloud services. MAXHEALTH, WIPRO, and SUNPHARMA also emerged as top gainers despite the overall market downturn. Railway stocks had also seen a rally earlier in the day, ahead of the Budget presentation.
The heightened volatility and cautious sentiment in the market reflect investors' careful assessment of the budget's implications. Traders are closely monitoring policy announcements, sector-specific cues, fund flow trends, and initial reactions from both domestic and global investors as they adjust to the real-time implications of the budget.
Even gold and silver ETFs experienced a dip, tracking the correction in global precious metal prices. According to Sriram B K R, Senior Investment Strategist at Geojit Financial Services, this decline mirrors the drop in international benchmarks recorded on January 30th, which has now influenced Indian ETF prices following the market's opening.
While the full impact of the budget on the market remains to be seen, the initial reaction indicates a period of adjustment and cautious trading as investors digest the various announcements and their potential consequences. The unusual weekend trading session added another layer of uncertainty, with market participants closely watching for further developments in the coming days.