Indian Stock Market Experiences Instability Following Union Budget Announcement
Click to start listening
Synopsis
Following the announcement of India's Union Budget 2025-26, the stock market saw considerable volatility on February 1. Initial positivity was short-lived, leading to declines in key indices. The new tax regime and global market influences contributed to the fluctuations observed in the domestic market.
Key Takeaways
- The stock market fluctuated significantly after the Union Budget announcement.
- BSE Sensex dropped by 455 points and Nifty fell by 115 points.
- New tax structure offers no tax for income up to Rs 4 lakh.
- Global markets also reacted negatively to US tariffs.
- Budget estimate for 2025-26 is approximately Rs 31.47 lakh crore.
Mumbai, Feb 1 (NationPress) The local stock market experienced notable fluctuations on Saturday after Finance Minister Nirmala Sitharaman unveiled the Union Budget for 2025-26.
Initially, there was an uptick, but soon both the BSE Sensex and NSE Nifty began trading lower.
Shortly after the Budget speech, the BSE Sensex fell by 455 points while the Nifty decreased by 115 points. This decline came after a brief surge triggered by the announcement that individuals earning up to Rs 12 lakh would be exempt from income tax.
Although this news initially propelled the markets upward, the gains were fleeting as the markets quickly stabilized.
The Budget forecast for the fiscal year 2025-2026 stands at approximately Rs 31.47 lakh crore, as declared by FM Sitharaman in Parliament.
Among the indices, the Nifty FMCG, Auto, Realty, and Consumer Durables sectors showed positive movement, while others lagged.
The Nifty Metal index recorded the largest drop, declining by 1.94 percent.
It was closely followed by Nifty Oil & Gas, which fell by 1.93 percent, along with Nifty PSU Bank and Nifty Mid-Small IT & Telecom, both of which saw a decrease of 1.29 percent.
Further updates related to the Budget revealed changes to the tax rate structure under the new tax regime. Income up to Rs 4 lakh will incur no tax, while income between Rs 4 lakh and Rs 8 lakh will be taxed at 5 percent, and income from Rs 8 lakh to Rs 12 lakh will face a 10 percent tax.
For earnings between Rs 12 lakh and Rs 16 lakh, the tax rate will be 15 percent, and for income from Rs 16 lakh to Rs 20 lakh, it will be 20 percent. Income ranging from Rs 20 lakh to Rs 24 lakh will be taxed at 25 percent, whereas any income exceeding Rs 24 lakh will attract a 30 percent tax.
Meanwhile, global markets felt the impact as Wall Street indices declined following US President Donald Trump's announcement of tariffs on Canada, Mexico, and China, set to take effect from February 1.
