New Delhi, Feb. 1 -- India's benchmark stock indices slumped about 3% intraday, as finance minister Nirmala Sitharaman's decision to raise securities transaction tax (STT) on futures and options (F&O) trades spooked investors.

Higher-than-expected government borrowings for the next financial year starting 1 April also worried investors, as the move could spike interest costs for businesses and make sovereign debt more attractive than equities.

The BSE Sensex closed 1.9% lower at 80,722.94, while Nifty 50 fell 2% to 24,825.45. Losses intensified in the broader markets, with both Nifty Smallcap 250 and Nifty Midcap 100 declining over 2% each.

"To provide reasonable course correction in F&O segment in the capital market and generate addit...