Foreigners will react to the budget provisions today - Thankfully, there are no devils in the details.

In a special session of the union budget, Nifty plunged 495 points or 1.96%, to close at a four month low at 24825. This marks its sharpest percentage drop since April 7, 2025.

The primary catalyst for the sell-off was the proposed hike in Securities Transaction Tax (STT) on F&O trades, a move aimed at curbing retail speculation that caught the market off guard.

The increase in STT will reduce derivative participation, especially from HFT players, and impact returns from arbitrage funds.

The budget delivers a pragmatic blueprint, shaped by global headwinds and domestic fiscal realities, that strikes a balance between ambition and prudence. Its underlying mathematics appears sound and credible, built on conservative revenue projections and aggressive funding for critical expenditure priorities.

The government has significantly raised the divestment revised estimates from ₹33,837 crore to an ambitious ₹80,000 crore under miscellaneous capital receipts in this budget. This sharp revision signals renewed optimism for stake sales in PSUs and asset monetisation, aiming to bolster non-tax revenues.

The recent changes in buyback rules are a positive for IT companies, easing compliance and boosting shareholder returns. Expect buybacks from large IT firms in the coming quarters.

Nifty has broken down from the consolidation band of 24900-25450. Nifty has also reclaimed its levels below the 200-day SMA and EMA, indicating a resumption of a downtrend. Next supports of Nifty are seen at 24571 and 24337, while a band of 25000- 25150 could offer resistance in the short term.

Indian markets are positioned to open modestly higher after yesterday’s sharp sell-off.