Brokerage stocks slump nearly 12% amid policy jitters

Shares of brokerage-related companies tumbled nearly 12 per cent on Sunday after Finance Minister Nirmala Sitharaman proposed an increase in the Securities Transaction Tax (STT) on derivatives. In her Budget speech for 2026-27, Sitharaman said the STT on futures contracts would be raised to 0.05 per cent from 0.02 per cent, a move aimed at curbing excessive speculation in the futures and options (F&O) segment.

In addition, the stock of Billionbrains Garage Ventures, the parent company of Groww, fell 5.11 per cent to end at Rs 168 and Anand Rathi Share And Stock Brokers went lower by 2.03 per cent to settle at Rs 567 on the bourse.

Addressing a post-budget conference here, FM Sitharaman said the Government is not against derivative trade, but wants small investors, who are facing huge losses, to stay away from the speculative F&O market. “This nominal increase is purely aimed at speculation, only to deter them, to discourage them.

We are not against it (F&O trade), but small investors are facing losses so how can we be quiet, so it (STT hike on F&O) is to deter such investments,” Sitharaman said. According to studies by Sebi, over 90 per cent of retail investors’ trades in the F&O segment lead to losses, and the capital markets regulator has also taken steps to reduce volumes in the past.

Capital market regulator Sebi has also cautioned small and retail investors against trading in F&O segment underscoring the need for responsible investing. “The proposed taxation on F&O is expected to raise transaction costs across the derivatives market, affecting individual investors as well as institutional participants such as AMCs, corporate hedgers, and portfolio managers who rely on these instruments for hedging and risk management,”

Ashish Singhal, Co-founder, Lemonn, a new-age stock trading and investment platform, said. He noted that the current STT framework does not differentiate between various categories of users or the purpose of derivative usage, genuine hedging activity is subject to the same higher costs as speculative trading.

“This uniform treatment could discourage some investors from employing prudent hedging strategies, effectively increasing their exposure to market risk and making portfolio protection more expensive,” Singhal said.

He further explained, “For every Rs 1 lakh worth of futures sold, traders now pay Rs 20 in STT instead of the previous Rs 12.50, and for a Rs 10,000 option contract sale, STT increased to Rs 10 from Rs 6.25”.