Why did Indian stocks fall after the budget?

Markets dropped nearly 2% because the STT on F&O trades increased, raising transaction costs. Higher frictions can reduce turnover, widen spreads, and curb speculative strategies. As liquidity providers adjust, volatility may stay firm. We expect activity to normalize once new costs are priced in.

What does the budget mean for India’s fiscal health?

It targets a 4.3% fiscal deficit and 55.6% debt-to-GDP, paired with about 9% higher capex to ₹12.2 trillion. This signals discipline and growth support together. For Canadian investors, that can improve credibility, lower risk premia over time, and support infrastructure-driven earnings.

How does the budget address semiconductors and data centers?

The semiconductor mission, rare earths focus, and data center incentives aim to localize supply chains. A cloud tax holiday to 2047 supports long-horizon builds. This could attract FDI and create opportunities for Canadian suppliers in power, cooling, materials, and engineering services.

Were there major changes to personal income tax?

India budget 2026 income tax messaging emphasized easier filing and compliance rather than large rate changes. Final details come with the Finance Bill. Canadians with India exposure should review updated rules and timelines, especially for withholding, documentation, and double tax treaty impacts.

Law and Government

India Union Budget February 02: STT Hike Hits Markets, Capex Up

ByHuzaifa Zahoor February 3, 2026February 3, 2026

Union budget India sets the tone for 2026 with fiscal consolidation and targeted industry push. The plan pegs the deficit at 4.3% of GDP, debt at 55.6%, and lifts capital spending about 9% to ₹12.2 trillion. Stocks fell nearly 2% after an STT increase on F&O trades. For Canadian investors, this shapes EM exposure, cross-border manufacturing, and data infrastructure plays. Incentives and a long cloud tax holiday aim to draw stable FDI while markets digest new trading costs.