India’s stock markets stage strong comeback after the budget-day debacle:Sensex rebounds over 940 points; Nifty reclaims 25,000 mark

India’s stock markets staged a strong comeback on Monday, February 2, 2026, after the budget-day debacle. The Sensex settled at 81,666.46 points, registering a gain of 943.52 points or 1.17%. Similarly, Nifty also closed on a strong note at 25,088.40 points. Markets saw a sharp decline on Sunday! On February 1, the market saw a sharp decline after the budget presentation. Sensex closed at 80,722 level, down by 1,546 points or about 2%. Nifty also fell by 495 points, closing at 24,825 level. Why Sensex crashed on budget day? The government increased the Securities Transaction Tax (STT) on futures trading from 0.02% to 0.05%. STT on options premium and exercise was also increased to 0.15%. This caused a sharp decline in the market. Foreign investors sold shares worth ₹588 crore on February 1 Foreign investors (FII) sold shares worth ₹588 crore on February 1. Meanwhile, domestic institutional investors (DII) had sold shares worth ₹682 crore. In December 2025, FIIs sold shares worth ₹34,350 crore. During this period, DIIs who were supporting the market bought shares worth ₹79,620 crore. Other Asian shares mostly fell on Monday Understand how STT will be levied on FO after Budget 2026: 1. Tax on Futures Trading: STT on futures trading has been increased from 0.02% to 0.05%. When you sell a stock or index futures contract, this tax applies to its entire value. 2. Tax on Options Premium: When you buy or sell an option, the tax on the price (premium) you pay has now increased. It has been raised from 0.1% to 0.15%. 3. Tax on Options Exercise: If an option is held till expiry and remains profitable, the tax levied at the time of settlement is called exercise STT. This has been increased from 0.125% to 0.15%. What is Securities Transaction Tax? STT or Securities Transaction Tax is a type of direct tax that applies to every buy and sell transaction in the stock market. You have to pay this tax even when you are incurring losses. It is deducted directly from your transaction value and the stock exchange deposits it with the government. With the increase in tax rates, you will now have to pay more money for the same transaction compared to before.