Budget 2026: Markets React to Sitharaman's Ninth Budget, STT Hike, and Buyback Tax

• Finance Minister Nirmala Sitharaman presented her ninth continuous Budget on February 1, 2026, leading to a 1,100-point fall in the Sensex.
• The market's disappointment stemmed from a perceived lack of big-ticket reforms and a small hike in Securities Transaction Tax (STT) on F&O segment from 0.02% to 0.05%.
• The Budget proposes taxing all buybacks as capital gains, replacing the dividend-like treatment from 2024, with an additional buyback tax on promoters.
• This change aims to disincentivize promoters from using buybacks for tax reduction, increasing the effective tax burden to 22% for corporate and 30% for non-corporate promoters.
• The article argues that not every Budget needs big reforms, citing off-Budget announcements like Dussehra-eve GST reforms and global events like the Israel-Palestine war and US trade policies as significant economic movers.

Why It Matters: Budget 2026 saw market volatility due to STT hike and buyback tax changes, but broader economic factors are also at play.