Domestic institutional investors turned net sellers for a second session as the government’s STT hike on equity derivatives sparked volatility, dragging the Nifty 50 lower and hitting brokerage stocks.

Domestic investors turn net sellers for 2nd straight session as STT hike rattles market

Domestic Institutional Investors Turn Net Sellers Amid STT Hike

Domestic institutional investors (DIIs) turned net sellers for the second consecutive session on Sunday, contributing to a decline in the Nifty 50 index and impacting brokerage stocks.

Recent Selling Activity

DIIs sold equities worth ₹683 crore on Sunday, following a sale of ₹601 crore on Friday.
Total selling over the two days stands at nearly ₹1,300 crore.
This marks the first instance since 27 June 2025 that DIIs remained net sellers for two consecutive sessions.

Overseas Investors Purchase Equities

Overseas investors purchased equities worth about ₹1,600 crore over the last two trading sessions, despite DIIs' selling pressure.

Impact of STT Hike on Market

The proposal to raise the securities transaction tax (STT) on equity futures to 0.05% from 0.02% triggered sharp volatility in the market, with the Nifty 50 index falling nearly 2%.

Stock Performance

BSE Ltd plunged about 8%.
Capital-market-linked stocks such as Angel One and Nuvama Wealth Management declined between 7% and 9%.

Government's Intent Behind STT Hike

Market participants said the move is aimed at curbing speculative trading after a surge in retail participation made India the world’s largest derivatives market by contracts traded.

"The measured increase in STT on futures and options reflects a clear intent to curb excessive speculation, fostering a more stable market and encouraging sustainable participation from long-term retail and institutional investors,"

Vishal Kampani, Vice Chairman and Managing Director of JM Financial Ltd.

Revenue Generation from STT Hike

The higher STT on equity futures and options is expected to generate approximately ₹15,000 crore in additional annual revenue for the government.

Year-So-Far Performance

So far in 2026, local institutional investors — including mutual funds and insurance companies — have bought equities worth ₹68,538 crore.
Foreign portfolio investors have sold around ₹30,000 crore worth of equities so far this year.