STT Hike Rattles Market: DIIs Turn Net Sellers for Second Straight Session

• Domestic Institutional Investors (DIIs) became net sellers for the second consecutive session, selling equities worth ₹683 crore on Sunday and ₹601 crore on Friday, totaling nearly ₹1,300 crore.
• This marks the first time since June 27, 2025, that DIIs have been net sellers for two consecutive sessions, contrasting with their average daily buying of ₹3,800 crore over the past three months.
• The selling pressure follows the government's proposal to increase the Securities Transaction Tax (STT) on equity derivatives, specifically raising STT on equity futures to 0.05% from 0.02%.
• The STT hike led to significant market volatility, with the Nifty 50 index falling nearly 2% and capital-market-linked stocks like BSE Ltd, Angel One, and Nuvama Wealth Management declining sharply.
• The Ministry of Finance expects the higher STT on equity futures and options to generate approximately ₹15,000 crore in additional annual revenue, aiming to curb speculative trading.

Why It Matters: STT hike on equity derivatives caused DIIs to turn net sellers, leading to market volatility and revenue generation.