Author: Akshita Jain | EQMint | Budget 2026

 

The markets slide as Budget 2026 time sets one of the worst crashes in a long time – Rs 10 lakh crore wiped out in a single session.”

 

Today, the crash in the Indian stock market was shocking, with Finance Minister Nirmala Sitharaman’s Budget 2026 speech triggering a major sell-off across major indices and leaving investors shocked. The Nifty50 crashed by more than 590 points, and the BSE Sensex fell by almost 1,850 points in the special Sunday session, one of the worst falls in its Budget-day history.

 

Such a dramatic decline in the market quickly turned into the number one financial story, with both traders and analysts scrambling to provide the best explanations of the decline and its implications on the future of equity in India in 2026 and beyond.

 

Reaction of Budget 2026: Sharp Markets Slide after FM Speech

The crash of the Enex was so significant in terms of the velocity and depth. Nifty50 index dropped to significant psychological markers and closed around 24,825, which is a 2.3 per cent decline, whereas the Sensex ended around 80,722 and lost over 2.2 per cent of its worth.

 

The markets had reopened with cautious expectations as investors believed that some much-needed reforms and incentives would give them a lift. Rather, the dramatic volatility in the special Budget day session witnessed huge wealth erosion and confidence destruction on the Dalal Street as a result of heavy selling pressure.

 

What caused the Stock Market Crash?

1. Increase in Securities transaction tax (STT)

The nearest and the most quoted reason for the crash in the stock market after Budget 2026 was the government’s move to raise the Securities Transaction Tax (STT) on the trading of derivatives (mostly Futures and Options or F&O) contracts.

 

STT, which is a tax on purchasing and selling securities, was raised drastically:

 

• Futures STT raised from 0.02% to 0.05%
• Options STT were raised to 0.15% -0.1%.

This large increase enhanced the trading expenses to a large group of participants, particularly the active traders, hedgers, and arbitrageurs, which lowers the activity of derivatives and lowers liquidity in the market.

 

The announcement caused aggressive selling in broking and market infrastructure-related stocks, with the stock of brokerage firms and exchanges particularly performing badly in the session.

 

2. Investor Sentiment Goes Negative

 

Sentiment was even worse after the shock of the STT, because traders revised their estimates with no expected tax breaks, including reductions in capital gains taxes that many had expected to give investment a boost.

 

The absence of any major policy interventions to attract foreign portfolio investors (FPIs) or lower the cost of speculative trading made the de-risking of the positions a choice of many players in the market, and the market-wide selling ensued.

 

3. Widened Market Participation Dented

 

It was not just the small players that were being sold off. There were also sharp falls in heavyweight stocks such as banking, energy, and financial services, which added to the fall in the indices and the extent to which the negative sentiment in the market was commonplace.

 

Market Impact in Numbers

• Nifty50: down ~593 points (~2.33%)
• Sensex: down ~1,843 points (~2.23%)
• Market Capitalisation: It is estimated that more than [?]9-10 lakh crore was washed away in the sell-off.

This performance was one of the worst Budget-day sessions in recent years – it is more characteristic of great market shocks that are only observed in times of economic crisis or big policy blunders.

 

Analyst Opinions: Knee-Jerk or Structural Issue?

Scholars debate whether the crash is more indicative of a temporary knee-jerk response or even more of a structural concern:

 

• Some market analysts interpret the action as a temporary shock that has a direct link to the STT jump and that markets are destined to be stable after traders re-evaluate the cost expectations.
• Others warn that the increase may have a long term impact on liquidity and participation, especially as the volumes in the derivative markets reduce as traders exit the more expensive markets.

The current investor strategy mood has shifted to cautious, diversified portfolios and chosen sector exposure, particularly in sectors like infrastructure, manufacturing, and technology, where the budget is better supported.

 

What Should Investors Do?

And with markets now reduced after this tempestuous decline:

 

• Do not respond to knee-jerk reactions – acute volatility may offer long-term investors opportunities.

• Invest in good stocks and stocks that show growth potential.

• Consider industry themes that are in line with Budget 2026 priorities – e.g., infrastructure, digital economy, and manufacturing incentives.

Market observers emphasize that although this decline is considerable, it does not always reflect a full-scale bear market but shows the sensitivity of equities to any change of policy, particularly in taxes and trading costs.

 

Conclusion

The stock market crash today after the Budget 2026 speech highlights the sensitivity of equity markets to policy changes, particularly regarding the costs involved, such as STT, that have a direct effect on trading profitability. Although investors have been shaken by the move, a balanced and strategic approach based on fundamentals can be used to overcome the volatility that still lies ahead.

 

Follow up on Nifty50, Sensex, and market trends as the post-budget trading week is witnessed.

 

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Resource Link : TOI

 

Disclaimer: This article is for informational and educational purposes only. Budget proposals and tax changes are subject to legislative approval, rules, and notifications. Readers are advised to consult qualified tax, legal, or financial professionals before making any decisions.