Rs 11 Lakh Crore Wiped Out: Budget-Day Market Crash Explained

• Indian equity markets saw their biggest Budget-day fall in six years on February 1, 2026, with Rs 11 lakh crore wiped out from BSE-listed companies' market capitalization.
• The primary trigger was an unexpected hike in Securities Transaction Tax (STT) on derivatives, increasing rates for futures, options premium, and exercise of options.
• Persistent foreign portfolio investor (FPI) outflows, lack of direct incentives for FPIs, and policy uncertainty around PSU banks further dampened sentiment.
• The Sensex plunged nearly 3% intraday to breach 80,000, closing down 1.88%, while the Nifty fell 1.96%, marking the weakest Budget-day performance since 2020.
• Despite the sell-off, analysts noted the Budget's positive focus on capital expenditure-led growth, with increased outlay for FY27 and sector-specific measures for infrastructure and manufacturing.

Why It Matters: Unexpected tax hikes on derivatives and FPI outflows caused India's biggest Budget-day market crash in six years.