Investors lost Rs 9.40 lakh cr in Budget Sunday crash

Core Viewpoint - The market capitalization of BSE-listed companies experienced a significant decline of Rs 9,40,581.75 crore, dropping to Rs 4,50,61,658.60 crore (USD 4.90 trillion) in a single day due to the proposed increase in Securities Transaction Tax (STT) on derivatives by Finance Minister Nirmala Sitharaman [1][5]. Market Reaction - The BSE Sensex fell by 2,370.36 points or 2.88 percent, closing below the 80,000-mark at 79,899.42 during afternoon trading [4]. - The benchmark index ended at 80,722.94, down 1,546.84 points or 1.88 percent, marking a notable decline similar to the drop on February 1, 2020 [5][7]. Impact of STT Increase - The STT on futures contracts is set to increase from 0.02 percent to 0.05 percent, while the STT on options premium and exercise will rise to 0.15 percent from 0.1 percent and 0.125 percent respectively [6][9]. - This increase in STT is viewed negatively by active traders and the derivatives ecosystem, as it raises transaction costs and may reduce speculative volumes, impacting liquidity in futures and options [6][8]. Investor Sentiment - The proposed tax changes aim to moderate excessive derivatives activity and boost revenue, but they could dampen retail participation during bullish market phases and affect short-term broking revenues [8]. - The overall market sentiment was negative, with 2,375 stocks declining, while only 1,759 advanced and 175 remained unchanged on the BSE [12]. Sector Performance - Among the major companies, State Bank of India and Adani Ports saw declines of 5.61 percent and 5.53 percent respectively, while Tata Consultancy Services, Infosys, Sun Pharma, and Titan were among the gainers [11][12]. - Various indices experienced significant drops, with BSE PSU Bank falling by 5.60 percent and the metal sector declining by 3.85 percent [12].