🇮🇳 Union Budget 2026: Market Reaction, Sectoral Impact & Derivatives Outlook

📌 Market Overview Indian equity markets witnessed sharp volatility post Union Budget 2026, marking one of the steepest Budget-day declines in recent years. The key trigger for the sell-off was the increase in Securities Transaction Tax (STT) in the derivatives segment, which dented trader sentiment and led to heavy unwinding of positions. Despite the government maintaining a growth-oriented yet fiscally disciplined stance, near-term market sentiment turned cautious due to higher transaction costs and global uncertainties. 💰 Union Budget 2026 – Key Highlights Tax & Personal Finance New Income Tax Bill 2025 introduced to simplify tax laws No change in tax slabs under the new regime Income up to ₹12 lakh effectively tax-free (with deductions) Senior citizens’ interest income deduction doubled to ₹1 lakh TCS on overseas tour packages reduced to 2% Infrastructure & Connectivity Record ₹12.2 lakh crore capex allocation for FY27 7 high-speed rail growth corridors announced New East–West Dedicated Freight Corridor 20 national waterways to be operationalised over 5 years Manufacturing, MSMEs & Jobs Semiconductor Mission 2.0 with ₹40,000 crore outlay ₹10,000 crore SME Growth Fund ₹10,000 crore Bio-Pharma manufacturing push Defence & Strategic Spending Defence allocation increased to ~₹5.9 lakh crore Strong push for indigenisation & domestic manufacturing Crypto & Digital Assets No changes announced 30% tax and 1% TDS remain unchanged 📉 Market Reaction Summary Nifty cracked over 500 points, forming a bearish engulfing candle Sensex fell over 1,500 points amid high volatility India VIX surged to a 7-month high Capital market-related stocks faced sharp selling pressure Key Reason: 📌 STT hike on Futures (0.02% → 0.05%) and Options (0.10% → 0.15%) 📊 Technical & Derivatives Outlook Nifty View Resistance: 25100 – 25250 Support: 24600 → 24400 Immediate range: 24500 – 25000 Broader range: 24300 – 25300 Bank Nifty View Resistance: 58750 – 59000 Support: 58000 → 57500 Trading range: 57500 – 59000 Put-Call Ratio declined sharply, indicating increased bearish sentiment. 🏭 Sector-wise Impact (Budget Theme Based) Positive / Focus Sectors Capital Goods & Infrastructure – higher public capex Defence Manufacturing – increased allocation & Make in India Semiconductors & Electronics Manufacturing – policy push Textiles & Apparel – export support, mega textile parks Pharmaceuticals & Biotech – biologics & biosimilar focus Data Centers & Digital Infrastructure – tax incentives Shipping & Logistics – ship repair ecosystem EV & Clean Mobility – continued government support Rare Earths & Critical Minerals – supply chain security Cautious / Volatile Sectors Capital Market & Broking – STT hike impact High beta financials – near-term pressure due to volatility 🌍 Global Market Cues Asian markets: Mixed US markets: Weak amid Fed leadership uncertainty European markets: Positive, led by metals Gold: Volatile after recent highs Crude Oil: Soft on geopolitical developments 🧭 Overall Market View Union Budget 2026 strikes a balance between growth and fiscal discipline, with strong long-term positives for infrastructure, manufacturing, defence, and services. However, higher STT, lack of direct tax relief, and global headwinds may keep markets volatile in the near term. 📌 Traders should remain cautious, manage risk strictly, and expect higher intraday swings. ⚠️ Disclaimer This blog is for educational and informational purposes only. We are NOT SEBI registered. Stock market investments are subject to market risks. Please consult a SEBI-registered financial advisor before making any investment or trading decision. Past performance is not indicative of future results.