New Delhi, Feb. 1 -- The proposal in the Union Budget 2026-2027 to increase the Securities Transaction Tax (STT) on futures and options (F&O) transactions rattled the Indian stock market investors, triggering a nearly 2% decline in the benchmark indices, Sensex and Nifty 50.

In her Budget speech, Finance Minister Nirmala Sitharaman announced a sharp hike in STT - by a massive 150% on futures transactions and 50% on options transactions. STT on futures has been raised to 0.05% from 0.02%, while the levy on options transactions has been increased to 0.15% from 0.01% earlier.

Addressing the post-Budget press conference, Sitharaman said the higher STT on derivatives was aimed at deterring small investors from engaging in speculative trades ...