“The stock market has reacted negatively to the STT hike on F&O (up to 0.05%) and the new tax treatment for buybacks, triggering a sharp intraday sell-off in the Nifty and Sensex. These measures raise transaction costs and change the near-term economics for both traders and companies relying on buybacks as a capital-return tool.
However, the Budget remains structurally sound, with a 4.3% fiscal deficit target for FY27 and a record ₹12.2 lakh crore capex allocation, ensuring that the long-term investment cycle remains intact. While short-term volatility is inevitable, the underlying earnings visibility for infrastructure, capital goods and manufacturing-linked sectors continues to improve.
Importantly, the fiscal framework continues to signal credibility, with a clear consolidation path and a declining debt-to-GDP trajectory, alongside measures such as infrastructure risk guarantees and asset monetisation aimed at crowding in private capital. This reinforces the view that while near-term market sentiment may adjust to higher transaction costs, the medium-term investment and earnings cycle remains well supported.”
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