Following Sunday’s steep sell-off on Budget Day brought on by an increase in the Securities Transaction Tax (STT) on stock F&O trades, the equity benchmark indices Sensex and Nifty began slightly higher on Monday as markets tried a tentative recovery.
Market Overview: Cautious Recovery
However, despite persistent investor caution, gains were uneven, with a narrow market breadth and high volatility.
The Nifty increased 31 points, or 0.1 percent, to 24,856 at 09:25 am, while the Sensex was up 223 points, or 0.3 percent, at 80,946. With 1,548 shares falling against 1,183 increases, the market’s breadth was clearly negative, indicating that purchases were selective rather than widespread.
The cautious recovery follows the benchmark indices’ severe losses on Budget Sunday, when Finance Minister Nirmala Sitharaman’s announcement of a substantial hike in STT on futures trading caused the Nifty to drop by around 2%. Although the goal of the action is to reduce excessive retail involvement in F&O, the market’s initial response has been risk-averse, especially in leveraged and market-linked equities.
🚀 Market STT Hike Impact Overview
- Date: Budget Sunday 2026
- Nifty Drop: Around 2% due to STT increase
- Market Reaction: Risk-averse with selective buying
- Sectors Impacted: F&O, leveraged equities
- Investor Sentiment: Cautious, waiting for clarity
⚠️ Selective Buying & Sector Gains
- Top Gainers: Larsen & Toubro, Adani Ports, Bharat Electronics, Reliance Industries
- Sectors: Infrastructure, energy, metals, defense-related
- Market Breadth: Narrow, indicating selective investor interest
- Pressure Sectors: Healthcare, FMCG, auto companies
- Midcap & Smallcap: Lagging behind benchmarks
Volatility & Technical Levels
As traders reevaluate their positions in the post-Budget scenario, volatility remained high, with the India VIX staying above 15. The Nifty is still susceptible below 25,000, according to analysts, with the 24,650–24,700 range being a crucial short-term support level.
According to market participants, the Nifty’s ability to stabilize above present levels after falling below important technical supports during the Budget session will determine attitude in the near future. Investors are cautious since the STT hike has sparked worries about short-term trading volumes, liquidity, and volatility, even though the overall budget is still focused on growth and fiscal restraint.
Volatility is high, FII flows are still brittle, and global signs are conflicting. In the upcoming sessions, analysts predict that markets will stay range-bound while investors await more precise indications regarding earnings traction and post-budget positioning.
Frequently Asked Questions
1. What caused the markets to plummet on Budget Day?
The significant increase in Securities Transaction Tax (STT) on equities futures and options caused markets to react negatively, raising worries about increased trading costs, less liquidity, and decreased derivatives volumes.
2. Why is the current rebound referred to be “cautious”?
Benchmark indices began higher, but market breadth was still narrow and volatility was high, suggesting selective purchasing rather than widespread investor optimism.
3. Which industries are now bolstering the market?
Support comes from defense-related equities, infrastructure, energy, metals, and a few index heavyweights like L&T, Reliance Industries, and Adani Ports.
4. Which industries are facing difficulties?
Midcap and smallcap equities continue to underperform, indicating risk aversion, while auto, FMCG, and healthcare companies continue to be sluggish.
5. What are the most important Nifty technical levels to keep an eye on?
While the 25,000 level continues to be crucial resistance for any long-term recovery, analysts view the 24,650–24,700 range as a significant short-term support zone.
Conclusion
After the Budget-led shock, the local equity market is making a modest attempt to recover, although sentiment is still erratic. Concerns over the STT hike, weak market breadth, and high volatility all continue to limit upside.
The overall tone of the market is still cautious, although selective purchases of heavyweight stocks and capital goods are providing support. Markets are anticipated to remain range-bound in the immediate future as investors consider the implications of the Budget, FII flows, and earnings visibility before making firm decisions.
Disclaimer:
This news is for informational purposes only and should not be considered as investment advice. Investors are advised to consult certified financial advisors before making any investment decisions.
