News

The Indian stock market came under heavy selling pressure during a special trading session on Sunday, February 1, as metal stocks once again emerged as the major drag. PSU banks also joined the sell-off, causing key indices to snap their three-day gaining run.

The Nifty 50 slumped nearly 2% to the 24,825 level, marking its biggest intraday correction in recent times, while the S&P Sensex tanked 2.17% to 80,484. Broader markets witnessed even sharper losses, with the Nifty Midcap 100 plunging 2.24% and the Nifty Smallcap 100 index falling 2.73%.

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 Foreign investors, who have already remained net sellers, have withdrawn up to $22 billion since last January, a trend that has also pushed the Indian rupee to multiple record lows.

Apart from the STT hike, the government will tax buyback proceeds for all types of shareholders as capital gains, Sitharaman said.

Another factor that spooked the market was the increase in the government borrowing limit to ₹17.2 trillion, which triggered a widespread sell-off across banking stocks, especially state-owned banks.

(more to come)

Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

Download the Mint app and read premium stories

Log in to our website to save your bookmarks. It'll just take a moment.

Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.