What exactly changed in STT for futures and options?

The Union Budget raised STT to 0.05% on futures and 0.15% on options. The levy applies to the transaction amount, so execution costs rise with trade size. This increases breakeven levels, especially for active, high-turnover strategies and multi-leg option trades.

Why did banks and metals fall more after the announcement?

Banks and metals carry significant open interest and are popular for hedging and tactical trades. When STT rises, these segments face higher costs to maintain positions. That can reduce liquidity and prompt faster de-risking, amplifying price moves during volatile sessions.

How does the STT hike affect retail traders?

Frequent entries and exits now incur higher cumulative charges. For example, a Rs 10,00,000 futures trade attracts Rs 500 in STT at the new rate. Multi-leg option strategies also accumulate STT across legs, so simpler structures and longer holding periods can help control costs.

What should investors monitor in the coming weeks?

Watch derivatives turnover, cash market share, advance-decline breadth, and implied volatility. Track rollovers and sector leadership, notably in banks and metals. These signals will show if liquidity is normalising and whether the market is absorbing the STT hike on F&O without persistent stress.

Law and Government

India Markets Today, February 3: STT Hike on F&O Sparks Broad Selloff

ByDanny Kontos February 3, 2026February 3, 2026

The STT hike on F&O in India’s Union Budget 2026 jolted equities, with a swift Sensex crash and broad Nifty selloff as traders repriced costs. The government lifted STT to 0.05% on futures and 0.15% on options, raising execution expenses and dampening risk appetite. Banks and metals led losses as volatility spiked. We explain what changed, how it affects trading behaviour, and what investors should watch next in this Union Budget 2026 market reaction.