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MUMBAI

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Market breadth has hit at least a five-year low during Sunday’s budget session, with four out of every five BSE 500 stocks retreating. This marks the most widespread sell-off on a budget day since 2021, erasing gains across every sector except pharma and textiles.

The analysis is based on the common sample of stocks currently belonging to the BSE 500 Index and excludes interim budgets.

While the Budgets of 2023 and 2024 also saw significant declines—with 62% and 68% of stocks falling, respectively—today’s bloodbath was far more systemic. The intensity was somewhat stark: Nearly 1% of stocks plunged over 10%, a level of carnage mirrored only in 2023.

Leading the decline was Hindustan Copper Ltd, which tumbled nearly 13%, followed by Multi Commodity Exchange (MCX), which plummeted 12%. The sell-off was fueled by a perfect storm: A massive crash in precious metals and a sharp hike in the securities transaction tax (STT) on derivatives—futures from 0.02% to 0.05% and options from 0.1% to 0.15%.

Other major casualties included IIFL Finance (10%) and Bharat Dynamics (9.8%). Metal stocks came under sharp selling pressure after silver futures prices in global markets tumbled by more than 30% in a single session on Friday.

Furthermore, 9% of the stocks dropped between 5% and10%, while around 70% of the constituents fell up to 5%. With this, around 20% of stocks managed to stay in the green, a sharp contrast to over 30% that typically held their heads above water during the last three budget sessions. In the previous two budgets (2021 and 2022), over 60% of the stocks traded in green. Overall, the 30-scrip blue-chip index Sensex was down nearly 2% while the BSE 500 was down 2%.

Investor anxiety is primarily focused on the STT hike for F&O, with the disproportionately steep increase on futures causing the most concern, noted experts.

“This comes on the back of higher capital gains taxes in 2025, raising overall transaction costs for market participants," highlighted Pranav Haridasan, managing director and chief executive, Axis Securities.

“Futures are a margined, risk-managed product and not typically the primary source of retail excess, which raises questions on whether higher STT will deliver the desired outcome or instead weigh on liquidity, participation, and India’s market cost competitiveness. These concerns are being voiced by foreign investors and domestic traders, and are reflected in the immediate market reaction," he added.

The stocks that managed to trade in green include Anant Raj, which rose 5.4% following a proposed tax holiday until 2047 for foreign cloud companies, and Amber Enterprises, which rallied 4.7% on the proposal that the Centre will expand the electronics component manufacturing scheme (ECMS) to a net outlay of ₹40,000 crore.

Stocks of pharma companies also soared on the proposal to launch Biopharma Shakti with an outlay of ₹10,000 crore. “The announcement underscores a clear policy intent to deepen India’s presence in high-value biologics and biosimilars. By focusing on domestic manufacturing capacity, regulatory strengthening, and supply-chain resilience, the initiative aims to improve India’s competitiveness in global biopharma markets at a time of rising demand and supply-chain diversification," noted Gyanendra Tripathi, partner and lead-indirect tax: north and west, tax and regulatory advisory, BDO India.

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