The Indian equity markets witnessed a sharp intraday sell-off on Sunday, February 1, after Finance Minister Nirmala Sitharaman presented her ninth consecutive Union Budget, announcing measures aimed at accelerating economic growth while maintaining fiscal discipline.
Soon after the Budget speech, investor sentiment turned cautious, triggering heavy profit-booking across sectors. The BSE Sensex plunged over 2,300 points from the day’s high, while the NSE Nifty 50 slipped sharply to an intraday low of 24,571.75, weighed down mainly by concerns surrounding the hike in Securities Transaction Tax (STT).
Market participants reacted negatively to the STT increase, fearing higher transaction costs could impact trading volumes and dampen market participation, particularly in derivatives and high-frequency trading segments. The announcement led to intense selling pressure in frontline stocks, dragging key indices lower within minutes.
Heavyweight stocks in banking, IT, and metal sectors bore the brunt of the sell-off. Banking majors, which had gained in anticipation of growth-friendly measures, reversed sharply as risk aversion set in. Broader markets also mirrored the weak sentiment, with midcap and smallcap indices registering steep declines. Despite the government’s focus on infrastructure spending, fiscal consolidation, and growth stimulus, investors remained wary of the immediate market impact of increased transaction costs. Analysts noted that while the long-term fundamentals of the Indian economy remain strong, near-term volatility is likely to persist as markets digest the Budget proposals.
Market experts advised investors to remain cautious in the short term and focus on fundamentally strong stocks, adding that clarity on policy implementation and global cues would guide further market direction.