Indian Equity Markets Slump After Budget Proposes Higher Taxes on Derivative Trades
Indian indices recorded their worst budget-day performance in six years after proposals to hike derivative taxes and a lack of new foreign investor incentives.
Insights:
Indian equity indices suffered their sharpest budget-day decline in six years on February 1, 2026, as Finance Minister nirmala sitharaman unveiled a federal budget for 
IN that proposed higher taxes on derivative trading. The Nifty 50 index dropped 1.96% to close at 24,825.45, while the BSE Sensex fell 1.88% to 80,722.94. This broad sell-off followed the proposal to raise the securities transaction tax on futures from 0.02% to 0.05% and on options from 0.1% to 0.15%, alongside a lack of major new measures to encourage foreign investment. The immediate market reaction reflects investor concern over the potential impact on trading volumes and market liquidity.
IN that proposed higher taxes on derivative trading. The Nifty 50 index dropped 1.96% to close at 24,825.45, while the BSE Sensex fell 1.88% to 80,722.94. This broad sell-off followed the proposal to raise the securities transaction tax on futures from 0.02% to 0.05% and on options from 0.1% to 0.15%, alongside a lack of major new measures to encourage foreign investment. The immediate market reaction reflects investor concern over the potential impact on trading volumes and market liquidity.
