India’s stock markets experienced a mixed opening during the special Sunday session, with the Sensex reaching an intraday high of approximately 82,726 and the Nifty approaching 25,357. However, the mood shifted dramatically following the announcements from Budget 2026, resulting in a downward trend for the indices as targeted tax increases and unmet expectations took their toll.
A key factor contributing to the negative sentiment was the announced hike in securities transaction tax (STT) on derivatives. The budget increased the STT on futures to 0.05%, up from the previous 0.02%, while the tax on options premiums rose to 0.15% from 0.1%. This move is intended to dampen excessive speculation in options trading but is expected to significantly impact trading volumes, affecting retail investors and daily traders adversely. Key players in the sector, including BSE, Groww, Nuvama Wealth, and Angel One, are likely to feel the repercussions.
Moreover, the budget revealed plans for higher government borrowing, which could potentially affect market liquidity and lead to rising yield rates. These changes may strain the treasury income of banks, consequently raising market borrowing costs and contributing to a negative market sentiment in the near future. Major banking institutions, including SBI, Bank of Baroda, and PNB, are expected to experience this sentiment impact.
Conversely, Budget 2026 introduced initiatives aimed at strengthening local production, particularly in the construction machinery sector, which bodes well for companies like Action Construction Equipment (ACE) and Escorts Kubota. A dedicated program for enhancing production capabilities could offer a competitive advantage through equipment like cranes, forklifts, and earthmovers.
Another highlight from the budget is the introduction of a tax holiday until 2047 for foreign cloud providers utilizing Indian data centers, a move expected to drive significant demand for facilities operated by Anant Raj in Delhi-NCR. This positions India as a potential global digital hub, benefitting Anant Raj’s operational capacity and expansion goals.
The budget also allocated Rs 40,000 crore towards bolstering local chip fabrication and PCB assembly, which is favorable for companies like Amber Enterprises and Dixon Technologies. Additionally, Biocon and Sun Pharma stand to gain from the newly proposed “Biopharma Shakti” program, which aims to enhance local production of biologics and innovative drugs. This funding is anticipated to elevate research and development capabilities and improve quality standards, enabling Biocon to expand its portfolio of cost-effective treatments for various non-communicable diseases.
Furthermore, the Budget 2026 made provisions to benefit NMDC Steel, enhancing its capacity for mining and processing rare earth minerals crucial for electric vehicles, renewables, and defense applications, particularly through dedicated Rare Earth Corridors. This is expected to leverage NMDC’s existing expertise in iron ore.
Overall, while the budget posed challenges through tax hikes and increased government borrowing, it also unveiled opportunities within sectors such as construction, technology, and pharmaceuticals. Analysts maintain favorable outlooks on several stocks, including Amber Enterprises, Dixon Technologies, BSE, Biocon, Sun Pharma, SBI, Bank of Baroda, PNB, and NMDC.
