Markets: As investors digest Budget proposals, Sensex, Nifty50 recover over 1%
Virendra Pandit
New Delhi: After their knee-jerk reaction to the Union Budget for 2026-27, tabled in Parliament on Sunday, investors digested its impact in the long run, and Sensex and Nifty bounced back, significantly recovering on Monday.
While the BSE Sensex rallied over 1,345 points from its intraday low of 80,387.25 hit a high of 81,732.25, the NSE Nifty50 reclaimed the 25,000-mark in the intraday to hit a high of 25,108.10, up nearly 428 points from the day’s low of 24,679.40.
By the end of the working day, Sensex regained 943.52 points (1.17%) to close at 81,666.46, while Nifty50 regained 254.45 points (1.02%) to close at 25,079.90.
The two Indian equity benchmark indices, Sensex and Nifty, witnessed a sharp rally on Monday as investors digested the Budget proposals, including the Securities Transaction Tax (STT) on future and options trading.
The rebound came a day after a sharp-sell off witnessed during the special trading session on Sunday when Union Finance Minister Nirmala Sitharaman presented the Union Budget the next financial year, 2026-27, in the Lok Sabha.
Besides other key measures, she had also announced an increase in the STT on futures from 0.02% earlier to 0.05% now, while the levy on options premium was raised from 0.10% to 0.15%.
In the broader market, the NSE MidCap 100 index was up 0.96%, and the Nifty SmallCap 100 index rose 0.84%.
After a muted start, majority of the sectoral indices recovered to trade higher. The Nifty Auto and Oil & Gas indices rose over 2% each. Nifty Metal, FMCG, and Realty also gained over 1% each.
Sunny Agrawal, who heads the fundamental research at SBI Securities, said the Budget for FY27 was largely in line with the expectations. “The only announcement that was completely out of the syllabus was the increase in STT on futures and options, particularly on futures. However, the market seems to have digested that development now,” he said.
The impact of higher STT is largely on futures traders, as the incremental cost of trading futures has gone up significantly. In contrast, the increase in cost for options trading is minuscule, at Rs. 4–5 per lot. Since most retail investors are predominantly on the buy side in options, this cost increase is unlikely to hamper trading volumes.
Another positive factor was the sharp correction in crude oil prices amid likely de-escalation between the US and Iran. Global commodity prices have also cooled off slightly. The crude oil benchmark, WTI Crude, was trading 5.26% lower at USD 61.85 per barrel. Gold and silver prices also extended the sharp declines, both globally and in India, as a strengthening US dollar and profit-taking at record highs weighed on investor sentiment, the media reported on Monday.
“Earlier concerns around rising commodity prices impacting margins of sectors such as wires and cables, autos, and other heavy users of copper and aluminium have eased. If commodity prices sustain at lower levels, margin pressure concerns could further reduce,” Agrawal said.
Recently, the US offered Venezuela crude to India as an alternative, and if India takes that deal, it could address US tariff concerns.
On Saturday, Union Commerce and Industry Minister Piyush Goyal said that negotiations for a proposed bilateral trade agreement between India and the United States are progressing, and both countries are working to close the deal soon. The “good news” on this front will be announced in the near future.
