The Indian stock market is expected to remain under significant pressure in the wake of the Union Budget 2026-27, which has triggered a sharp negative reaction among investors. This downturn is primarily driven by a surprising and substantial hike in the Securities Transaction Tax (STT) on derivatives, announced in the budget. The government has raised the STT on futures to 0.05 percent from the previous 0.02 percent, while the STT on options has been increased to 0.15 percent from 0.10 percent or 0.125 percent, depending on the contract type.
Impact of STT Hike on Trading Costs and Market Sentiment
This significant increase in STT rates has led to a notable rise in trading costs, particularly affecting stocks that are heavily traded in the futures and options (F&O) segment. Brokerage counters are also feeling the weight of this change, as higher transaction taxes can dampen trading volumes and investor participation. The market's immediate reaction has been bearish, with indices showing weakness and volatility.
Technical Analysis by Vaishali Parekh
Vaishali Parekh, Vice President of Technical Research at Prabhudas Lilladher, provided a detailed analysis of the current market conditions. She highlighted that the sentiment in the Indian stock market is weak, as the Nifty 50 index has broken and sustained below the 200-day exponential moving average (DEMA), which is positioned at 25,200. This breach is a critical technical indicator that often signals a bearish trend.
According to Parekh, the Nifty 50 index is currently trading in a range between 24,400 and 25,200. She warned that if the index fails to close above the 25,200 level soon, it may attempt to touch the lower end of this range, around 24,400. This scenario would indicate further downside pressure and a continuation of the weak bias.
Nifty 50 Outlook and Key Levels
Elaborating on the Nifty 50's performance, Parekh noted that the index experienced a highly volatile session following the budget announcement. It tanked heavily with profit booking, hitting a low near the 24,500 zone during intraday trading. The sentiment has been shaken, and the bias has turned weak, as evidenced by a big bearish candlestick pattern that breached below the 200-period moving average at 25,200.
This breach has triggered pessimism among traders, and the index is maintaining a very cautious approach. The next major support for the Nifty 50 is located near the 24,400 zone. For the bias to improve and for the market to establish conviction for a further rise, the index would need to close above the 25,200 zone on a sustained basis.
Parekh identified immediate support for the Nifty 50 at 24,600, with resistance at 25,000. These levels are crucial for short-term trading decisions and risk management.
Bank Nifty Analysis and Projections
Turning to the Bank Nifty, Parekh observed that the index plunged heavily, forming a huge red candle on the daily chart. It hit a low near the 57,800 zone during the intraday session, with the bias weakening and important support levels being breached. Further slide is anticipated in the coming sessions, indicating continued pressure on banking stocks.
The Bank Nifty has an important and crucial support positioned near the significant 200-period moving average at the 56,800 zone. This level needs to be sustained to prevent the overall trend from turning bearish. Parekh expects the Bank Nifty to have a daily range between 57,600 and 59,000, providing traders with key boundaries for intraday movements.
Intraday Stock Recommendations by Vaishali Parekh
For investors looking for intraday trading opportunities, Vaishali Parekh recommended three stocks to buy today, along with specific entry points, targets, and stop-loss levels. These recommendations are based on technical analysis and current market conditions.
- TCS: Buy at ₹3,186, with a target price of ₹3,310 and a stop-loss set at ₹3,120.
- Delhivery: Buy at ₹436.80, aiming for a target of ₹460, and placing a stop-loss at ₹426.
- RateGain: Buy at ₹629.45, targeting ₹665, with a stop-loss at ₹615.
These stock picks are intended for short-term trading and should be considered in the context of the overall market volatility and the recent STT hike impact.
Important Disclaimer and Investor Guidance
It is essential to note that this story is for educational purposes only. The views and recommendations provided above are those of individual analysts or broking companies and do not represent the opinions of Mint or other financial institutions. Investors are strongly advised to consult with certified experts and conduct their own research before making any investment decisions, especially in light of the current market uncertainties and regulatory changes.
The Indian stock market's trajectory will likely depend on how investors digest the STT hike and other budget provisions, along with global economic factors. Monitoring key technical levels and staying informed through reliable sources is crucial for navigating this period of heightened volatility.
