Mostilal Oswal believes that the increase in the securities transaction tax (STT) on futures and options (F&O) announced in the Budget 2026 is a “negative” for Capital market stocks. They expect that the earnings of the brokerage companies may also be hit as a result.
The Finance Minister Nirmala Sitharaman raised STT on futures to 0.05% from 0.02% of the total trade value, while STT on options has gone up to 0.15% from 0.1% of the option premium. Motilal Oswal noted that volumes may fall as a result. They are basing this on the past market reaction.
Past STT hikes show mixed impact on futures and options volumes
Motilal Oswal pointed out that. “In October 2024, when STT rates were last increased, futures volume fell 1% month-on-month (MoM), while options volume rose 15% MoM.”
They analysed that the cost of trade for a futures transaction of Rs 1 crore will increase by Rs 3,000. The cost of trade for an options transaction with a premium of Rs 5,000 will increase by Rs 2.5.
The cost of trade for an options transaction with a premium of Rs 1 crore will increase by Rs 5,000. Motilal Oswal added that total costs for arbitrage funds are likely to increase, depending on rollover costs.
Motilal Oswal estimates FY27 earnings of Angel One to be hit by 13%. Groww to hit by 7% and BSE to be hit by 9% because of the changes, assuming a 10% hit on orders/volumes.
Fiscal discipline intact
Apart from this Motilal Oswal said that the Budget 2026 ‘ticks most boxes, misses few’ and flags higher gross market borrowing. “While the overall fiscal math looks stable, the key negative surprise was higher gross market borrowing of Rs 17.2 lakh crore, above market expectations of Rs 16–16.5 lakh crore.”
Motilal Oswal,, however, expect RBI liquidity measures and possible bond buybacks to ease pressure over the course of the year. RBI MPC is scheduled to meet this month from Feburary 4-6.
Motilal also believes that a disinvestment target of Rs 80,000 crore for FY27, marking a sharp jump from FY26 levels are ambitious numbers.
In terms of fiscal math, Nominal GDP expectations, it believes, are realistically set at 10% and fiscal consolidation was modest at 4.3% of GDP in FY27 from 4.4% in FY26RE. The target of Debt-to-GDP ratio of 50 ±1% by FY31, with FY27 estimated at 55.6%, down from 56% in FY26 (RE) is also a tick, according to Motilal Oswal.