In what investors hoped would provide a booster to the Indian stock market after a volatile run, today’s Union Budget instead delivered the weakest budget-day market performance in six years, underscoring persistent uncertainty across markets.
The Nifty 50 suffered a 2%, or 500-point, crash, falling below the psychological level of 25,000 to 24,825 points, marking its weakest budget performance since 2020, when it plunged 2.25%.
Today’s steep crash has also brought the index to its lowest level in four months and represents a 6% drop from the January peak of 26,373.
Over the last 25 years, the Nifty 50 has closed with over 2% losses on four occasions, with 2009 recording the largest crash of 5.8%, mint reported earlier.
All major sectoral indices closed lower, with the Nifty PSU Bank index falling the most at 5.57%, followed by the Nifty Metal, Nifty Oil & Gas, Nifty FMCG, and Nifty Auto indices, all shedding over 2%.
Three major factors behind the sharp sell-off
The broad-based sell-off was triggered after the government proposed to hike the securities transaction tax (STT) on equity futures to 0.05% from 0.02%, according to the Budget presented in Parliament on Sunday. The tax on options premiums and on the exercise of options would be increased to 0.15%.
Though the measures aim to curb speculative activity, some experts believe they could discourage foreign participation in the near term. Foreign investors, who have already remained net sellers, have withdrawn up to $22 billion since last January—a trend that has also pushed the Indian rupee to multiple record lows.
The raise in the STT limit sent shockwaves across capital market-related stocks. Apart from the STT hike, the government will tax buyback proceedings for all types of shareholders as capital gains.
Another factor that spooked the market was the increase in the government borrowing limit to a record. ₹17.2 lakh crore, which triggered a widespread sell-off across banking stocks, especially state-owned banks.
Additionally, the market had expected the government to announce major reforms in response to higher US tariffs and measures to attract overseas investors, but those fell short of expectations, further hurting sentiment.
On the positive side, the government focused on boosting manufacturing via higher allocations for semiconductors, electronics, biopharma, auto, and critical minerals.
It also kept the fiscal deficit target at 4.3% and allocated a record ₹12.2 lakh crore for capex expenditure, which was higher than market estimates.
Nifty below 25,000: Is more downside likely?
Ponmudi R, CEO of Enrich Money, said the index decisively broke below the 25,000–24,900 support band and slid swiftly to an intraday low near 24,572. The subsequent rebound towards the 25,150-zone lacked conviction, highlighting weak follow-through buying amid elevated volatility. Fresh selling emerged once again, dragging the index back below the 25,000 psychological level into the 24,700–24,800 zone.
Technically, he said, Nifty is now consolidating below its earlier breakdown area, indicating a clear sell-on-rallies structure in the near term. As long as the index remains below the 25,200–25,300 resistance band, the bias stays cautious to bearish. Only a sustained move back above 25,300 would neutralize the negative undertone and signal short-term stabilization.
Aakash Shah, Technical Research Analyst at Choice Equity Broking said the immediate support for the Nifty 50 lies between 24,500 and 24,400, while resistance is placed in the 25,000–25,150 zone. A decisive move above 25,150 could open the path towards 25,550.
Disclaimer: : This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
