**MARKET BRIEF: Budget 2026 Triggers Sharp Correction** **Sunday Special Session Ends in Deep Red** Indian equity markets witnessed a severe downturn during Sunday’s special trading session following the Union Budget 2026 presentation. A steep hike in the Securities Transaction Tax (STT) on derivatives spooked sentiment, leading to a broad-based sell-off. **The Trigger: Massive STT Hike** Finance Minister Nirmala Sitharaman announced a crackdown on speculative trading with aggressive tax revisions: * **Futures:** STT raised to **0.05%** (from 0.02%) — a **150%** increase. * **Options:** STT on premiums raised to **0.15%** (from 0.1%) — a **50%** increase. * **Rationale:** The move aims to curb excessive retail participation in the F&O segment and "course correct" market stability. **Market Impact** Benchmark indices plunged to 2026 lows as traders priced in higher transaction costs and reduced liquidity. * **Sensex:** Crashed **1,547 points** (-1.88%) to close at **80,722**. * **Nifty 50:** Slumped **495 points** (-1.96%) to settle at **24,825**. * **Wealth Erosion:** Investors lost approximately **₹10 lakh crore** in market capitalization in a single session. **Sector Watch: Brokerages & Exchanges Hammered** Stocks directly linked to trading volumes faced the harshest selling pressure, fearing a decline in active trader participation. * **BSE Ltd:** Plummeted **~15%** intraday. * **MCX:** Tanked over **12%**. * **Angel One:** Dropped **~13%**, hitting lower circuits. * **Nifty PSU Bank:** The worst-performing sectoral index, shedding over **5.5%**. **Additional Pressure Points** * **Buyback Tax:** Buyback proceeds will now be taxed as capital gains for shareholders, removing a key tax-efficient reward route. * **FII Flows:** Foreign investors, already net sellers in January, are expected to remain cautious due to increased impact costs. **Outlook:** Markets are likely to remain volatile as high-frequency traders and arbitrageurs adjust their strategies to the new tax regime. The focus now shifts to whether the cash market can absorb the liquidity shock from the derivatives segment.