Budget failed to appeal to common people:Share market witnessed sell-offs in special trading session; know 5 major reasons

In Finance Minister Nirmala Sitharaman’s 85-minute Budget speech, no major changes were announced on taxation or issues directly affecting the common people. There was also no clear roadmap to deal with tariffs imposed by former US President Donald Trump. This had a direct impact on the Indian stock market. By 11 am, the Sensex was up 457 points at 82,726, while the Nifty had risen 120 points to 25,440. However, as the Budget speech progressed, the market began to slide. By the close of trade, the Sensex had plunged 1,546 points, or 1.88%, to a record low of 80,722. The Nifty fell 495 points, or 1.96%, to close at 24,825. Of the 30 Sensex stocks, 28 ended in the red, while all sectoral indices on the Nifty declined. This is the heaviest Budget Day sell-off seen in six years. Earlier, in 2020, the Sensex had fallen 2.43% on Budget Day to close below 40,000, while the Nifty had slipped 3.26% to 11,643. So, what are the five major reasons behind the stock market hitting record lows on Budget Day, and why is this Budget being described as dull and unhelpful for the common people? We explain in today’s explainer. Why is the Budget being called dull and unhelpful for the common people?
The Finance Minister repeatedly mentioned the ‘Reform Express’ at the start of her speech and spoke about major reforms. However, the Budget did not include any new announcements directly linked to the common citizen. There were no changes in income tax slabs or tax exemptions, offering no relief to the middle class. No announcement was made to reduce GST rates on daily essentials such as pulses, cooking oil or medicines, which was seen as a missed opportunity to ease inflationary pressure. The Budget also lacked any specific schemes or subsidies for the middle or lower-middle class. There were no major new initiatives announced for employment, job creation or industry. While increasing farmers’ income was mentioned, no new schemes related to MSP or agricultural credit were announced. Similarly, the Budget did not outline any detailed framework or plan to counter the pressure from Trump-era tariffs. While there was a focus on strengthening infrastructure, MSMEs and skill development, experts believe that improving the retail sector would require policy reforms, along with boosting supply chains and demand, the impact of which will be gradual. Congress leader Jairam Ramesh wrote in a post on X that this was a “fake Budget” which led to a market crash, adding that despite all the hype, the 90-minute speech proved to be completely lacklustre. However, several industry leaders — including Mahindra Group CEO Anish Shah, DBS Bank executive director and economist Radhika Rao, and Hero FinCorp MD and CEO Abhimanyu Munjal — said the Budget was forward-looking rather than populist. According to them, it focuses on sectors such as mining, engineering, chemicals and renewable energy, which had not received adequate attention earlier. Next, let’s understand the five major reasons behind the stock market crash on Budget Day… 2. Tax hike on Futures and Options trading What was announced?
In Budget 2026, the Finance Minister announced an increase in Securities Transaction Tax (STT) on Futures and Options (FO) trading. STT on futures was raised from 0.02% to 0.05%, while STT on options was increased from 0.0625% to 0.1%. The government said the move was aimed at curbing speculation and boosting revenue. In FO trading, shares are not actually bought or sold; instead, traders enter into contracts based on future price movements. STT is a direct tax levied on every FO transaction and is payable even if the trader incurs a loss. The tax is deducted directly on transaction value and deposited with the government by stock exchanges. Impact:
The higher STT makes high-risk FO trading more expensive, which could reduce trading volumes and the number of active traders. Kotak Securities MD Shripal Shah said the hike would raise costs for traders and hedgers, leading to lower volumes. Following the announcement, shares of major brokerage firms fell sharply. Stocks of BSE, Angel One and Groww declined by up to 9%. Earlier, in 2024, STT on futures was raised from 0.0125% to 0.02%, and on options from 0.0625% to 0.1%. This means taxes on FO trading have nearly tripled over three years. 3. No major announcement for the defence sector The defence allocation in Budget 2026 stands at ₹7.85 lakh crore, up from ₹6.81 lakh crore last year. However, contrary to expectations, no major reforms were announced. Given border tensions with Pakistan and China, and the global arms race, investors were expecting announcements related to privatisation, new PLI schemes or export incentives for defence manufacturing. Impact:
The lack of big announcements led to selling pressure in defence stocks. Shares of HAL, BEL, Bharat Dynamics and Data Patterns fell by up to 8%. Investors had expected a nearly 20% increase in allocation and a clear roadmap. Stocks had already risen ahead of the Budget in anticipation, but disappointment over a “business as usual” approach triggered a sell-off. 4. No plan to counter US tariffs in the metal sector What was announced?
Customs duty exemptions were announced for solar glass and rare earth elements, providing relief to solar and green energy companies. However, there was no relief for steel, copper or other metal exports. Although the Finance Minister mentioned US tariffs and spoke about promoting manufacturing, no specific measures were announced to shield metal exporters from the impact of American tariffs. Impact:
Indian metal exporters are already facing challenges due to cheap Chinese imports and fluctuating global demand. With no increase in import duties on foreign metals or reduction in export duties on Indian metals, investors were disappointed. As a result, Tata Steel fell 4%, Hindustan Copper dropped up to 12.63%, JSW Steel declined 1.89%, Hindustan Zinc slipped 9.29%, and Vedanta fell 3.87%. 5. Annual capital expenditure increased by only ₹1 lakh crore What was announced?
The Finance Minister said public capital expenditure for FY 2026–27 would be raised to ₹12.2 lakh crore, around 9% higher than ₹11.2 lakh crore in 2025–26. Capital expenditure includes long-term investments in infrastructure, development projects, power and renewable energy, which support growth and job creation. Impact:
Market analysts were expecting a much larger increase. According to CRISIL, the hike is insufficient to accelerate growth and puts more pressure on private investment. Anand Rathi Group chairman Anand Rathi said the market had expected at least a 13% increase, to around ₹12.6 lakh crore. Lower-than-expected capex growth affected infrastructure and EPC stocks. LT fell up to 3%, while shares of Adani Ports, IRB Infrastructure and NBCC declined between 1% and 5%. 6. No major changes or announcements on GST What was announced?
The Finance Minister highlighted that GST collections in January 2026 stood at ₹1.93 lakh crore, about 6.2% higher than in January last year. Estimated GST collection for 2026–27 is ₹11 lakh crore. However, no changes were announced in GST rates, slabs or relief measures. Impact:
The market had expected a reduction in GST rates, especially on essential items such as pulses and cooking oil. There were also hopes of a sharper rise in GST collections, which could have allowed tax relief. FMCG companies depend heavily on consumption demand. Modest GST growth suggests weaker-than-expected sales growth. The lack of GST relief dampened consumption sentiment, leading to declines in stocks such as Hindustan Unilever and ITC. The FMCG sector, on average, fell by around 2%.