Markets witnessed a brutal selloff on Sunday, with the Sensex plunging 1,546.84 points to close at 80,722.94 and the Nifty tumbling 495.20 points to end at 24,825.45 as the Union Budget 2026-27’s proposal to increase Securities Transaction Tax (STT) on futures and options blindsided investors and triggered panic selling across sectors.
The special Budget Day session saw the Sensex fall 1.88 per cent while the Nifty dropped 1.96 per cent, marking its sharpest percentage decline since April 7, 2025, and closing at a four-month low. The carnage was widespread, with the Nifty Midcap 100 plummeting 2.24 per cent to 57,120.80, while the Nifty Smallcap 100 crashed 2.73 per cent.
The proposed STT increase from 0.02 per cent to 0.05 per cent on futures emerged as the primary catalyst for the rout. “For every ₹1 lakh worth of futures sold, traders now pay ₹20 in STT instead of the previous ₹12.50,” said Ashish Singhal, Co-founder at Lemonn. “The proposed taxation on F&O is expected to raise transaction costs across the derivatives market, affecting individual investors as well as institutional participants.”
Trading turned violent after Finance Minister Nirmala Sitharaman began her budget speech at 11.00 am. “The index witnessed heightened volatility, recording an intraday swing of 869 points, which was its widest trading range since June 04, 2024,” said Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities.
Sectoral damage was extensive, with capital market, defence, and PSU bank indices bleeding over 5 per cent. Among Nifty constituents, Bharat Electronics Limited (BEL) emerged as the worst casualty, crashing 6.02 per cent to close at ₹421.95. Hindalco followed with a 5.78 per cent fall to ₹907, while ONGC dropped 5.50 per cent to ₹254.20. State Bank of India (SBI) tumbled 5.31 per cent to ₹1,020, and Adani Ports declined 5.06 per cent to ₹1,347.90.
Technology and healthcare stocks provided limited cushion. Wipro emerged as the top gainer, rising 2.12 per cent to ₹241.93, followed by Max Healthcare, which gained 1.82 per cent to ₹974.25. TCS added 1.74 per cent to close at ₹3,178.20, while Cipla climbed 1.44 per cent to ₹1,343 and Sun Pharma advanced 0.86 per cent to ₹1,609.
Market breadth remained decisively negative with 2,375 stocks declining against 1,759 advances on BSE. A total of 253 stocks hit 52-week lows compared to just 68 touching 52-week highs. The Nifty Bank index crashed 2.00 per cent to 58,417.20, while Nifty Financial Services fell 2.31 per cent to 26,699.10.
PSU banks bore the brunt of selling as the government announced gross borrowings of ₹17.20 trillion through dated securities, higher than market expectations. “The gross borrowing programme is higher than anticipated and may weigh on bond market sentiment in the near term,” said Deepak Agrawal, CIO-Debt at Kotak Mahindra AMC. “Government bond yields are likely to edge higher, with the 10-year benchmark expected to trade in the 6.65–6.75 per cent range.”
Metals witnessed heavy selling as copper futures on MCX plummeted over 5 per cent while gold and silver futures crashed more than 5 per cent and 9 per cent respectively.
“On daily charts, it has formed a long bearish candle, and it is currently trading below the 200-day SMA, which is largely negative,” said Shrikant Chouhan, Head Equity Research at Kotak Securities. “Technically, after a sharp intraday dip in the second half of the day, the market trimmed some losses.”
Looking ahead, analysts expect continued volatility with the zone of 24,700–24,650 acting as immediate support for the Nifty. “A sustained move below 24,650 may accelerate the downside momentum toward 24,500, followed by 24,350 in the short term,” said Shah, while resistance is pegged at 25,000-25,200 levels.
Published on February 1, 2026
