Both Sensex and Nifty crashed after finance minister Nirmala Sitharaman's Budget presentation on Sunday. As of 12:37 pm, Sensex crashed 1,521 points to 81,048.69 and Nifty dropped by 453 points to 24,965.45.
Nirmala Sitharaman is displayed on a screen outside the Bombay Stock Exchange (BSE) ahead of her budget speech (REUTERS)
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According to news agency Reuters, 46 of the Nifty 50 constituents declined, with heavyweights such as Reliance and SBI losing 2.5% and 5%, respectively.
The development came shortly after Sitharaman ended her much-anticipated Union Budget speech in Parliament.
In her speech, Sitharaman announced a hike in STT (Securities Transaction Tax) on Futures and Options to 0.05% and 0.15%, respectively. The move is likely to impact derivatives trading costs.
While STT, a government tax applied to market transactions, was already in place, the hike in its charge means that Futures trading will be now be costlier. While the increase may help curb excessive short-term speculation and boost tax revenue, it also reduces net profits for active futures traders.
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Shareholders will now be taxed on all buyback proceeds as capital gains.
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Shareholders will now be taxed on all buyback proceeds as capital gains.
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Sitharaman also announced the restructuring of the two state-run entities - REC Ltd (formerly Rural Electrification Corporation) and Power Finance Corporation (PFC), as part of the government's public sector financial institution strengthening.
In a first, the Union Budget was presented on Sunday this time. Sitharaman's speech covered many areas, including India's expansion of the rare earths scheme, the semiconductor mission and a revised timeline for ITR filing.
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