Bulls vs bears: Key factors that moved Dalal Street—what’s good, what’s bad in Budget 2026 | Anil Singhvi analysis

Budget 2026 delivered a mixed message for Dalal Street. While the government stuck to fiscal discipline and pushed long-term reforms, markets reacted sharply to changes in capital market taxation. According to Anil Singhvi, the sell-off was largely driven by one factor: higher uncertainty around taxes, especially the hike in securities transaction tax (STT).

Market reaction: was everything priced in?

Singhvi said investors are still assessing how much of the Budget impact is left. The sharp intraday fall after the STT announcement showed that markets were caught off guard.

“The immediate correction was triggered by STT. Without that, the Budget would have looked largely neutral for equities,” he said.

What worked for markets

Singhvi highlighted several positives that reflect policy continuity and fiscal prudence.

Key positives in Budget 2026

The fiscal deficit target of 4.3 per cent for FY27 stayed in line with expectations.

Capital expenditure of Rs 12.2 lakh crore, around 10 per cent higher than actual FY26 spending.

A clear debt-to-GDP roadmap to bring the ratio close to 50 per cent by 2031.

Efforts to rationalise buyback taxation for individual investors.

A long-term tax holiday for cloud services operating in India, extending up to 2047.

Rationalisation of TCS (Tax Collected at Source) rates across categories.

Higher equity investment limits for overseas Indians.

A major boost for IT services as the safe harbour limit was raised from Rs 300 crore to Rs 2,000 crore.

Higher allocations for defence, EMS and textiles, reinforcing the manufacturing push.

Proposal to set up a committee to review FDI in public sector banks.

“These measures show fiscal discipline and long-term thinking,” Singhvi said.

Why markets were disappointed

Despite the positives, investors focused on what was missing.

Key negatives flagged by markets

No steps to immediately improve foreign investor sentiment.

Repeated changes in capital market taxation, which hurt predictability.

STT was increased instead of being reduced to shift trading from derivatives to cash markets.

Buyback tax was eased, but multiple tax slabs for promoters and corporates created confusion.

Retrospective or rule changes linked to older instruments unsettled investors.

New tax treatment for sovereign gold bonds bought from the market, even if held till maturity, dented confidence.

“Markets want stability and certainty in taxes. Frequent tweaks create discomfort,” Singhvi said.

The STT factor: the tipping point

Singhvi was clear that STT was the single biggest trigger for the sell-off.

“If STT had been left untouched, the market reaction would have been far more muted,” he said. The Nifty’s sharp intraday fall came immediately after the STT announcement.

What this means for investors

Budget 2026 is not structurally negative for equities. The medium-term story remains intact. But near-term volatility may persist as foreign investors reassess costs and tax certainty.

Singhvi advised investors to stay selective. Focus on sectors benefiting from capex, manufacturing, defence, EMS and IT. At the same time, be cautious in derivatives-heavy trades until clarity improves on taxes.