Budget 2026 Live Updates: Markets Sour After Sitharaman Hikes STT On F&O, Lower Capex Than Estimates

Finance Minister Nirmala Sitharaman unveiled Modi 3.0's third Union Budget 2025-26 on Sunday, Feb. 1, with its key focus areas on boost for India's infrastructure growth and capex allocation. With today's budget, the finance minister's policy announcements have resulted in price reductions for several items.

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“By placing biopharma among the seven strategic frontier sectors and launching Biopharma Shakti with an outlay of Rs 10,000 crore over five years, the Union Budget makes a decisive investment in India’s health and innovation future. As India’s disease burden shifts toward cancer, diabetes and autoimmune disorders, biologics and biosimilars will be central to improving longevity and quality of life. This initiative—spanning manufacturing scale-up, global-grade regulation, new NIPER institutions and a nationwide clinical trials network—can firmly position India as a global biopharma manufacturing hub," said Kiran Mazumdar Shaw, Chairperson, Biocon Group.

The Union Budget 2026 brings a wave of significant reforms for salaried taxpayers, with Finance Minister Nirmala Sitharaman emphasising simpler compliance, reduced litigation, and meaningful relief for individuals. A major highlight is the rollout of the Income Tax Act 2025, which will replace the 1961 law and come into force on April 1, 2026.

Sitharaman noted that tax forms have been redesigned to ensure “ordinary citizens can comply without difficulty,” marking a major shift toward user-friendly processes.

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Unveiled on the twin occasions of Magh Purnima and Guru Ravidas Jayanti, the Union Budget 2026 was positioned by Finance Minister Nirmala Sitharaman as a continuation of 12 years of economic stability and disciplined fiscal stewardship. The government framed the document around three guiding ‘Kartavya' pillars—productivity‑led growth, national capacity creation and universal opportunity access—signalling a push toward a more competitive, future‑ready economy.

With a historic capital expenditure outlay of Rs 12.2 lakh crore, a renewed manufacturing push across strategic sectors, stronger support systems for MSMEs and rural enterprises, large-scale tourism and heritage initiatives, and a sweeping regulatory refresh, the Budget attempts to fire the economy on multiple engines.

Read Budget 2026 Key Highlights.

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Finance Minister Nirmala Sitharaman has introduced the Finance Bill 2026 in the Lok Sabha.

Speaker Om Birla has adjourned the House. The next sitting will be on Monday.

Finance Minister Nirmala Sitharaman has concluded her Budget 2026 speech. The address lasted 1.25 hours.

• To increase limit for duty-free imports of specified inputs for processing seafood for export to 3% from 1% of FOB value
• To allow duty free imports of specified inputs available for exports of leather
• To extend basic customs duty exemption for capital goods used to manufacture BESS
• To exempt customs duty on sodium antimonate for use in manufacture of solar glass
• To exempt customs duty on imports of goods for nuclear power projects till 2035
• Proposed to exempt customs duty on raw materials for manufacture of parts for aviation
• To exempt basic customs duty on specified parts for microwave ovens.

Finance Minister Nirmala Sitharaman has proposed that buyback proceeds for all categories of shareholders will now be taxed as capital gains, moving away from earlier mechanisms that treated different shareholders differently.

Announcing a major change in the taxation of share buybacks in her Budget speech, she explained that under the new structure, corporate promoters will face an effective tax rate of 22%, while non‑corporate promoters will be taxed at 30% on buyback transactions.

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Finance Minister Nirmala Sitharaman proposed to hike Securities Transaction Tax (STT) on derivatives trades. Aimed at curbing speculative trading in the high-volume futures and options (F&O) segment, STT on futures will be raised from 0.02% to 0.05%. The impact on options is even more pronounced, with tax on option premiums set to increase from 0.1% to 0.15% while the STT on the exercise of options will rise from 0.125% to 0.15%.

Investors were quick to react to the news, sending shares of BSE on a downward spiral. 

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• All IT services to be clubbed under a single category with a common safe harbour margin of 15.5%
• Threshold for availing safe harbour for IT services to be enhanced to `2000 cr from `300 cr
• Safe harbour for IT services to be approved by an automatic rule-driven model
• To provide a tax holiday till 2047 to any foreign company that provides cloud services by setting up data centres in India
• To provide a safe harbour of 15% on cost in case co providing data services from India is a related entity

ICC National Textile Chair Sanjay K Jain says

• National Fibre Mission to achieve self-reliance in natural fibres like silk, man-made, and special-use fibres.
• Launch of the Mahatma Gandhi Gram Swaraj Initiative to promote khadi, handloom, and handicrafts.
• Samarth 2.0 to strengthen the textile skill ecosystem and promote modernisation.
• Expansion of the textile industry and employment generation scheme to modernise traditional textile clusters.
• National Handloom and Handicrafts Programme for the integration and scaling up of existing schemes.
• Textile Eco Initiative for world-class and sustainable textiles and garments.
• Establishment of Mega Textile Parks in mission mode.

The Budget proposes to allow inter-cooperative society dividend income as deduction under New Tax Regime.

• To extend time available to revise returns with payment of nominal fee
• Individuals with ITR1 and ITR2 to continue to file till July 31
• Non-audit business cases, Trusts to be allowed time to file returns to Aug 31
• TDS on sale of immovable property by NRI to be deducted by resident buyer vs earlier requirement of TAN
• Propose to rationalise prosecution framework in Income Tax Act
• Interest awarded by the motor accident claims tribunal to a natural person will be exempt from income tax and any TDS on this account will be done away with.
• To allow taxpayers to update returns even after reassessment proceedings have been completed with 10% tax

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• Revised estimates of expenditure in FY26 was Rs 49.6 lakh crore
• FY27 expenditure estimated at Rs 53.5 lakh crore
• FY27 net market borrowing from dated securities estimated at Rs 11.7 lakh crore
• Gross market borrowing seen at Rs 17.2 lakh crore
• Net tax receipts estimated at Rs 28.7 lakh crore in FY27

• Debt to GDP ratio estimated at 55.6% of GDP in BE2026-27 vs 56.1% in RE25-26
• Fulfilled commitment made in FY22 to reduce Fiscal deficit below 4.5% of GDP
• In RE 2025-26 Fiscal Deficit estimated at 4.4% of GDP
• In line with new fiscal prudence path Fiscal Deficit estimated at 4.3% of GDP in FY27

Crisil View: Capex to GDP at Rs 12.2 lakh crore is at 3.1% of Crisil’s GDP estimate for next fiscal. The budget estimate for this fiscal was also 3.1%. Grants in aid for capital creation typically should add another 1% points to this.

• To provide special attention to small farmers
• To undertake initiatives to develop 500 reservoirs
• To strengthen fisheries value chain in coastal areas
• To support animal husbandry through credit-linked subsidy programme
• To encourage creation of livestock farmer producer organisations
• To support high-value crops such as coconut, sandalwood, cashew in coastal areas
• To support generation of walnuts in hilly regions
• Dedicated programme proposed for Indian cashew and cocoa
• To promote focused cultivation of sandalwood

• To set up a National Institute of Hospitality
• Propose scheme for training of guides in tourism hubs in India
• India has potential and opportunity to offer world class trekking, hiking destinations
• Turtle trails along key nesting sites in Orissa, Karnataka, Kerala to be developed
• To develop 15 archaeological sites across country

• Government to support States through challenge routes to create five university townships
• Planned academic zones to host multiple colleges, skill centres, residential areas
• Proposal to set up one girls hostel in every district

• India's animation, visual effects, gaming sector is growing industry
• Propose to support Indian Institute of Creative Technologies in Mumbai to set up labs across country
• To establish through challenge route new national institute of design in East India.

Finance Minister Nirmala Sitharaman proposes an outlay of Rs 20,000 crores over the next 5 years in Carbon Capture Utilization and Storage (CCUS) technologies to scale up and achieve higher readiness levels in end-use applications across.

• Propose to set up high-powered education-to-employment standing committee
• Committee to prioritise areas to optimise potential for growth in services space
• Committee to review impact of new technology like AI on services sector
• Existing institutions for allied health professionals to be upgraded
• New AHP institutions to be set up in private, govt sectors
• Strong care system covering geriatric, allied sectors to be built
• Hubs for medical value tourism to be created
• Propose to launch scheme to support States to set up 5 regional medical hubs
• Medical hubs to have Aayush centres, infra for diagnostics, post care rehabilitation

• Propose setting up high-level committee on banking for Viksit Bharat to comprehensively review banking sector.
• Vision for NBFCs for Viksit Bharat has been outlined with clear targets.
• Propose to restructure Power Finance Corp, REC
• Propose comprehensive review of Foreign Exchange Management framework
• Propose to introduce a market making framework to promote corporate bond market
• Individual persons resident outside in India to be permitted to invest in equity through Portfolio Investment Scheme
• Individual Persons Resident Outside India (PROI) will be allowed to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme. It is also proposed to increase investment for PROI from 5% to 10%.

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• Propose to set up Infra Risk Guarantee Fund to strengthen private developers risk management.
• Propose setting up of dedicated REITs to recycle assets of CPSEs
• To operationalise 20 new National waterways over next five years
• Training institutes to be set up as regional institutes of excellence in waterways space
• Ship repair ecosystem catering to inland waterways to be set up in Varanasi, Patna
• To launch coastal cargo scheme to increase share of coastal shipping, inland waterways
• To enhance last-mile, remote connectivity to give support to manufacturing of sea planes

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Finance Minister Nirmala Sitharaman pegged the Union Budget 2026's capital expenditure at Rs 12.2 lakh crore for FY27.

The capex for FY26 was Rs 11 lakh crore,

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The Budget proposes to launch Mahatma Gandhi Gram Samaj initiative to support Khadi, handicrafts. The government will also introduce dedicated initiative to promote globally competitive sports goods. 

• To support mineral rich states of Orissa, Kerala, Andhra Pradesh, Tamil Nadu
• To launch scheme to support states in estabilishing three dedicated chemical parks
• Propose scheme for container manufacturing with budgetary allocation of Rs 10,000 crore over 5 year
• Propose National Fibre Scheme for self-sufficiency in fibres
• Propose Textile expansion and employment scheme to modernise textile clusters. Aim for Samarth 2.0 to promote skilling in textile sector

Read more. 

The government will launch India Semiconductor Mission 2.0 with focus on industry-led research and training centres for semiconductors, increase outlay to Rs 40,000 crore to capitalise on momentum of semiconductor mission.

The Union Budget proposes to develop India's global bio-pharma hub under 'Biopharma Shakti' with Rs 10,000 crore outlay over five years. It will create network of 1000 accredited trial sites to bolster bio-pharma industry.

Finance Minister Nirmala Sitharaman proposed interventions in key areas:

• Propose to scale up manufacturing in strategic sectors
• Aim to create champion MSMEs
• To ensure long-term security and safety
• To develop strategic economic regions
• India's disease burden is observed to be shifting to non-communicable diseases

Read: Nirmala Sitharaman Announces Proposal To Build Rare Earth Mineral Corridors In India

"Government has undertaken comprehensive reforms for accelerating growth, boosting productivity. Over 350 reforms have been rolled out recently. Central government working with State governments on deregulations. The reform express is well on its way," said Finance Minister Nirmala Sitharaman.

Finance Minister Nirmala Sitharaman said the Budget 2026 is 'Yuva Shakti' driven.

"First is to accelerate and sustain economic growth by enhancing competitiveness, second is to fulfill aspirations of our people. Third kartavya is to ensure that every family, community, region has access to resources, opportunities. Threefold approach requires supportive ecosystem," she said.

"We have ensured that citizens benefit from every action of the government. Measures have delivered high growth rate of around 7%. Measures helped make substantial strides in poverty alleviation. India will continue to take confident steps towards Viksit Bharat," said Finance Minister Nirmala Sitharaman.

"India's economic trajectory marked by stability over 12 years. Stability has been displayed amidst ongoing uncertainty. Government has preferred reform over rhetoric and pursued far-reaching reforms," said Finance Minister Nirmala Sitharaman.

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The Lok Sabha has convened for the Budget presentation. Speaker Om Birla is making opening remarks and will call on Finance Minister Nirmala Sitharaman to address the House.

The Modi Cabinet has approved the Union Budget 2026.

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President Murmu extended her best wishes to the Union Finance Minister and her team for the presentation of Budget. Her office released photos from the meeting.

The Union Cabinet chaired by PM Narendra Modi is currently meeting in Parliament to consider and approve the Union Budget 2026.

Top Stocks To Watch For Budget

• L&T, IRB Infra – capex key to watch; capex growth of less than 10% could be disappointing
• HAL, BDL, BEL – defence capex key to watch; growth of less than 20% could be disappointing
• Dixon, Amber, PG Electro - Budget allocation under PLI scheme; specifically mobile PLI as the same ends in FY26
• Home First, PNB Housing, LIC Housing, Aavas Housing - Increasing allocation for housing schemes (CLSS)
• IOCL, BPCL, HPCL – hike in excise duty by more than Rs 2/litre would be negative
• Adani Green, Tata Power and Waaree Renewable – increased allocation for solar irrigation pumps

Follow Stock Market Live Updates here.

Gold financiers are feeling the heat of gold prices 

• Manappuram shares are down over 6%
• Muthoot Finance shares are down over 11%

What's in store for gold in Budget 2026?

Saurabh Mukherjea, Founder & Chief Investment Officer of Marcellus Investment Managers, explains why last year's income tax and GST cuts proved to be a game-changer for the economy.

WATCH:

Nirmala Sitharaman has reached Parliament complex in New Delhi. The Union Cabinet chaired by PM Modi will convene shortly to approve the Union Budget 2026.

Ahead of Nirmala Sitharaman's budget speech, GST data for January shows a pick up in collections. Gross GST revenue rose 6.2% YoY to Rs 1.93 lakh crore and net GST revenue jumped 7.6% to Rs 1.7 lakh crore. 

Net Cess revenue down 55% to Rs 5,768 crore.

Turning attention to the commodity markets, silver prices fell again Sunday morning, plunging up to 10% on the MCX as the global sell-off in the metals market continues.

The Silver MCX is currently trading at around Rs 2.65 lakh. The prices are down 36% from record highs, a drawdown that is part of a larger correction in precious metals.

Read more: Silver Extends Fall Ahead Budget 2026; Declines 9% On MCX

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Union Finance Minister Nirmala Sitharaman along with Minister of State For Finance Pankaj Chaudhary and other officials heads to Rashtrapati Bhawan ahead of presenting the Budget.

India's benchmark equity indices opened lower ahead of the Union Budget 2026.

The Nifty and Sensex are down.

Follow Stock Market Live Updates here.

Nirmala Sitharaman is wearing a handwoven Kancheevaram silk sari, honouring Tamil Nadu’s age old weaving legacy. It is a purple coloured Kattam Kancheevaram, with light golden brown checks, aka kattam, and a coffee brown border with thread work. This continues her quiet championing of the country’s various handloom weavers and their kala, from Mangalgiri and Ikat, to Bomkai, Kantha, Madhubani, and more.

Source: NDTV

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The shares of PSU Bank stocks like Bank of Maharashtra, Punjab National Bank, State Bank of India will be in focus as the government may propose the Banking Governance Bill today. The move aims to make PSU banks professional, competitive, and tech-driven, sources told NDTV Profit.

The bill will also likely ensure PSU banks can finance large projects and not just safeguard public savings. The Bill may look into better board composition, clearer accountability and could also address concerns over pay and talent gaps between public sector banks (PSBs) and private banks, as per sources.

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NDTV Profit's Niraj Shah explains the math behind India's growth plan.

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Finance Minister Nirmala Sitharaman will unveil Modi 3.0 government's third straight budget on Feb. 1, 2026. India's middle-class and salaried employees are expecting more income tax cuts in India Budget 2026. D-Street investors are eyeing exemption on higher LTCG tax and STT.

Follow Live Updates On Income Tax.

India's stock markets will be open on Sunday for the Budget day. Both NSE and BSE will conduct equity trading under regular market hours.

It is to be noted that Sunday remains a settlement holiday. Although stock markets will remain open, shares traded on Friday cannot be squared off today because of the disruption to the normal settlement cycle.

Follow Stock Market Live Updates here.

ASLO READ: All You Need To Know Going Into Trade On Feb 1

Here are some important fiscal metrics to watch out for in Budget 2026.

GDP Growth

The government's approach to gross domestic product (GDP) growth rate will be watched out for by all in FM Sitharaman's Budget speech in view of the economic challenges posed by the US tariffs and geopolitical tensions. The Economic Survey, presented in Parliament on Jan. 29, has projected a real GDP growth rate of 6.8-7.2% for FY27, compared to 7.4% estimated for the current fiscal (FY26), reflecting a steady economic advancement.

Fiscal Deficit 

The fiscal deficit was estimated at 4.4% of GDP for FY 2025-26. In this Budget, the government is likely to reduce the fiscal deficit target further.

Revenue Deficit 

The gap between revenue expenditure and revenue receipts was expected to narrow to Rs 5.24 lakh crore in FY26, or 1.5% of GDP, compared to Rs 6.1 lakh crore (1.9% of GDP) in the revised estimates of 2024-25. 

Capital Expenditure 

The Budget 2025 underscored continued emphasis on capital spending, with capital expenditure on the books at Rs 11.21 lakh crore for FY 2025-26, slightly higher than the revised Rs 10.18 lakh crore for the previous financial year. 

ALSO READ: Budget 2026: Key Fiscal Numbers To Track — From Deficit And Debt To Capex

Finance Minister Nirmala Sitharaman, along with the Budget team, will leave from Kartavya Bhawan for Rashtrapati Bhavan at 8:45 a.m., sources told NDTV Profit. It is customary for the FM to present a copy of the Union Budget to the president before heading to Parliament.

Budget Wishlist From India Inc

• Promote indigenous manufacturing & support innovation 
• Policy certainty is the key driver of long-term investment
• Tax certainty & uniformity in implementation of tax laws
• Speedier resolution mechanism for IT, GST & Customs duty disputes
• Export frameworks and customs alignment to support manufacturing
• Momentum builds for API-driven customs systems
• Managing the transition to the New Income Tax regime
• Funding and incentives to support early-stage and MSME growth
• Tax credits as catalysts for green investment and low-carbon R&D
• Ease land acquisition challenges for the speed of doing business 

Defence-linked stocks are likely to remain in focus during the Union Budget 2026 on Feb. 1, as investors factor in a moderate increase in defence outlay and continued emphasis on indigenisation.

Hindustan Aeronautics is seen benefiting from its aircraft and engine manufacturing pipeline, while Bharat Electronics remains a key play on defence electronics, radar and communication systems.

Bharat Dynamics is also on investors' radar given its role in missile manufacturing, while shipbuilders such as Mazagon Dock Shipbuilders and Garden Reach Shipbuilders are being tracked amid ongoing naval modernisation.

Nirmala Sitharaman had, in her first Budget in 2019, replaced the leather briefcase, which had been in use for decades for carrying Budget documents, with a traditional 'bahi-khata' wrapped in red cloth. This year's budget will be in paperless form, as done in the last four years.

This year's Union Budget 2026 presentation is set to break a 75-year tradition, with the government preparing to overhaul the structure of the Finance Minister's speech, sources told NDTV. Historically, Part A of the Budget has carried most of the detailed policy announcements, while Part B served primarily as a shorter segment focused on tax proposals and select updates.

That convention is expected to change this year. According to people familiar with the matter, Finance Minister Nirmala Sitharaman is likely to devote unprecedented detail and emphasis to Part B, making it the most closely watched portion of the speech. The section is expected to serve not just as a tax policy outline but as a broader statement on India's economic direction.

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The budgeted fiscal deficit, which is the difference between the government's expenditure and income, for fiscal 2026 is estimated at 4.4% of GDP. Having achieved a fiscal consolidation roadmap with a deficit below 4.5% of GDP in fiscal 2026, the markets will keenly watch for direction on debt-to-GDP reduction.

The Union Budget 2026 comes against a complex backdrop for India. Domestic demand has held up following direct and indirect tax cuts, inflation has sharply moderated, global uncertainties including geopolitical tensions, trade frictions, volatile commodity prices and uneven monetary easing by major central banks continue to cloud the outlook.

The Union Budget 2026 is likely to give top priority to rural development, and development of the agriculture sector. Nirmala Sitharaman is expected to announce more funds for programmes to raise employment opportunities in rural areas, according to sources.

The Rural Development Ministry has asked the Finance Ministry to increase the budget of the new employment guarantee scheme, 'Viksit Bharat - G Ram G' or VB-G Ram G, to Rs 1.51 lakh crore, or by 72%, as per NDTV. Last year, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) got a budget of Rs 86,000 crore.