**Union Budget 2026-27: Market Brief** **Core Analysis: Stability Over Reform** The Union Budget presented on **February 1, 2026**, is characterized as "unremarkable" by Economist Swaminathan Aiyar. The government prioritizes macroeconomic stability amid strong growth, eschewing bold structural overhauls for cautious continuity. While the administration avoided major legislative risks—such as the abolition of the fertiliser subsidy—it introduced numerous small-scale changes that may increase compliance complexity rather than simplification. **Fiscal & Capital Expenditure** * **Fiscal Deficit:** The target for FY27 is set at **4.3%** of GDP, a marginal consolidation from the revised estimate of **4.4%** in FY26. * **Capex Push:** Public capital expenditure sees a **9%** increase, rising to **₹12.2 lakh crore** from ₹11.2 lakh crore previously. * **Taxation:** A new Income Tax Act, 2025 will be effective from **April 1, 2026**. **Market Reaction: Volatility & STT Hike** Markets reacted negatively to the announcement, primarily driven by a hike in the Securities Transaction Tax (STT) on derivatives. * **Indices:** The Sensex fell **1,546 points** (-1.88%) to close at **80,722**, while the Nifty dropped roughly **2%** to settle at **24,825**. * **Derivatives Tax:** STT on Futures increased to **0.05%** and Options to **0.15%**, triggering a sell-off in brokerage and exchange-related stocks. **Sectoral Impact** Measures for specific sectors (MSMEs, biotechnology, rare earths) are viewed as politically necessary but economically modest. The approach involves minor tweaks across nearly 100 sub-sectors rather than a singular, transformative policy push. This strategy reflects a government confident in the existing **7%** growth trajectory, opting to avoid disruptive reforms in the current election cycle phase. [Reform, Rebuild, Rise: Swaminathan Aiyar on Union Budget](https://www.youtube.com/watch?v=mmDNDeYwyC0) This video features Economist Swaminathan Aiyar providing a detailed breakdown of the Union Budget 2026, expanding on his "unremarkable" verdict and analyzing the fiscal numbers mentioned above. http://googleusercontent.com/youtube_content/0