Indian equity markets staged a rebound on Monday after facing intense selling pressure on Budget Day. The two benchmark indices - BSE Sensex and NSE Nifty - advanced more than 1% each on Monday as investors analysed the fine print of Budget 2026.
The BSE Sensex closed at 81,666.46 levels, up 943.52 points or 1.1%, while the NSE Nifty50 index was up 262.95 points or 1.06% at 25,088.40 levels. In the broader market, the NSE MidCap 100 and the Nifty SmallCap 100 indices surged about 1% each.
The recovery came after the equity market crashed on Budget Day as the central government’s decision to increase the securities transactions tax (STT) on derivatives trading spooked investors. The domestic benchmark indices, Nifty 50 and Sensex, fell nearly 3% each intraday on Sunday and settled lower by 2%.
The widespread selling had wiped out about Rs 11 lakh crore from the m-cap of BSE listed firms on Sunday.
“The Budget was largely in line with our modest expectations, but short of high impact immediate measures, signaling more of continuity in the fiscal approach of past five years. The Finance Minister balanced the imperatives of staying on the fiscal consolidation path with sustaining growth dynamics, while also seeking to fortify India’s business architecture against prevailing geopolitical headwinds,” said Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services .
The currency also showed signs of stability, with the rupee strengthening by 37 paise to 91.56 against the US dollar. Meanwhile, gold and silver registered another session of heavy selling on Monday. In the past three sessions, gold and silver futures have fallen by more than 41% and 25%, respectively.
Commenting on the Budget, Bhuvaneshwari A., MD&CEO, SBICAP Securities, said that it strikes a strong balance between growth and macro-economic stability, with continued fiscal consolidation improving the estimated fiscal deficit to 4.3% from 4.4% and reinforcing investor confidence.
She added that the sustained push on capex-led growth across various sunrise sectors such as semiconductors, data centres, critical minerals, electronics, biopharma, infrastructure, shipping and railways strengthens the foundation for long-term capital formation and competitiveness.
“Raising the individual person residing outside India (PROI) investment limit from 5% to 10% and expanding the aggregate cap from 10% to 24% of the company's equity, will deepen overseas participation, improve liquidity and further integrate Indian markets with global capital flows. On the markets side, the calibrated increase in STT on futures and options seeks to curb excessive speculation while encouraging healthier cash market participation, while we await market reaction to this development,” added Bhuvaneshwari.
Pranav Haridasan, MD and CEO, Axis Securities, said that the Union Budget 2026–27 reinforces India’s focus on long-term, infrastructure-led growth and continued momentum in infrastructure spending, with a clear thrust on transport corridors, high-speed rail and digital infrastructure, is a strong positive.
“Market unease, however, is centred on the increase in STT on F&O, particularly the sharper hike on futures. This comes on the back of higher capital gains taxes last year, raising overall transaction costs for market participants. 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,” added Haridasan.
