The Indian capital markets witnessed a volatile start to the week following the Union Budget 2026 announcement, which included a sharp hike in the Securities Transaction Tax (STT) on derivatives. On Monday, February 2, shares of Bombay Stock Exchange (BSE) and Angel One Ltd. staged a recovery after Sunday’s steep sell-off, while Groww continued to underperform.
- BSE Ltd.: Shares rose by 4–4.5%, bouncing back from an intraday low of ₹2,530 to close near ₹2,694.50. This recovery came after the stock had plunged nearly 15% intraday on Sunday.
- Angel One Ltd.: The brokerage firm’s shares gained 2–2.5%, trading around ₹2,371.90, signaling investor confidence despite the tax hike.
- Groww (Billionbrains Garage Ventures Ltd.): In contrast, Groww’s shares slipped further, losing 3–4%, trading near ₹160.20, reflecting continued investor caution.
Other financial services firms such as Nuvama Wealth and 360 ONE WAM also saw volatility, underscoring the broader uncertainty in the sector.
Impact of STT Hike on Derivatives
The Finance Minister Nirmala Sitharaman announced in the Budget that the STT on futures would rise from 0.02% to 0.05%, while the STT on options premium increased from 0.10% to 0.15%. This move rattled investor sentiment, leading to sharp declines across capital market-linked stocks on Sunday.
While analysts believe the hike in options STT may not drastically impact volumes due to accessibility-driven demand, the futures segment is expected to feel the pressure more acutely. The Nifty Capital Markets index had dropped nearly 6% on Sunday before stabilizing slightly on Monday.
Investor Sentiment and Outlook
- Short-term volatility is expected as traders adjust to the new tax regime.
- Brokerage firms like Angel One may benefit from increased retail participation despite higher costs.
- Exchange operators such as BSE could see mixed outcomes, with trading volumes potentially impacted but long-term fundamentals remaining strong.
- Fintech platforms like Groww face challenges in sustaining investor confidence, especially given their reliance on retail flows and sensitivity to cost structures.
Market experts suggest that while the STT hike is a headwind, the long-term growth trajectory of India’s capital markets remains intact, supported by rising retail participation and digital adoption.
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Conclusion
The rebound in BSE and Angel One shares highlights resilience in India’s capital market ecosystem, even as Groww continues to struggle. The STT hike has introduced short-term turbulence, but with strong fundamentals and increasing retail participation, the sector is expected to stabilize in the coming weeks. Investors are advised to remain cautious, diversify portfolios, and rely on expert research to navigate the evolving landscape.
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