Derivatives segment accounts for a significant share of revenues for brokerage platforms.
Shares of listed broking firms such as BSE Ltd, Angel OneGroww, nuvma and IIFL Capital Services came under sharp selling pressure after the increase in Securities Transaction Tax (STT) on futures and options, sparking concerns over trading volumes and near-term profitability for capital market intermediaries.
BSE shares closed 8 per cent lower at ₹2,578.10, after plunging 15 per cent to ₹2,377.40 against the previous close of ₹2,797. CDSL traded 7 per cent lower at ₹1,229.30.
Angel One shares tanked 9 per cent to end at ₹2,313. The stock dragged over 13 per cent to ₹2,199.50 during the session from the previous close of ₹2,540.90.
Billionbrains Garage Ventures (Groww) shares fell 14 per cent to ₹152.52 before settling with 5 per cent loss at ₹168.10.
IIFL Capital Services stock plunged over 17 per cent to ₹272.60 in early trade.
In addition, Nuvama Wealth Management and 360 ONE WAM also witnessed significant sell-off.
The increased STT on futures contracts and on options premium could cool participation in the derivatives segment, which accounts for a significant share of revenues for brokerage platforms, according to analysts.
Jateen Trivedi, VP – Research Analyst (Commodity and Currency) at LKP Securities, said markets were already uneasy about the fiscal deficit target of 4.3 per cent for FY27, but the sharper reaction stemmed from the higher transaction levies. He noted that the STT hike is likely to dent participation in futures and options and could also reduce speculative volumes in commodities.
Dhiraj Relli, Managing Director and CEO of HDFC Securities, described the market’s initial reaction as largely knee-jerk, driven by the revised tax framework for derivatives. While acknowledging that the enhanced STT regime may create near-term headwinds for capital market participants, Relli said the Budget reflects a pragmatic and calibrated policy approach. He added that investors should remain focused on sectors with strong earnings visibility rather than capital-intensive plays, and argued that the government’s long-term vision for market stability and maturity could ultimately benefit the broader financial ecosystem through FY27.
Echoing concerns around trading activity, Shripal Shah, Managing Director and CEO of Kotak Securities, said the steep increase in STT on futures and options, coming on top of last year’s hike, is likely to raise impact costs for traders, hedgers and arbitrageurs. According to him, this could cool derivative activity and lead to lower volumes, with the intent appearing to be moderation rather than revenue maximization, as any tax gains may be offset by reduced turnover.
Aakash Shah, Technical Research Analyst at Choice Equity Broking, warned that the STT increase could act as a marginal negative for foreign portfolio investor flows in the near term, particularly for high-frequency and derivative-focused global funds. He pointed out that higher transaction costs meaningfully reduce post-tax returns for active strategies at a time when overseas investors have already been cautious due to global risk-off sentiment, elevated US bond yields and currency pressures.
Shah added that while long-only, fundamentally driven FPIs are unlikely to be deterred solely by the STT hike, the higher costs could marginally shift tactical allocations toward other Asian markets. Overall, he said the move risks dampening trading volumes and slowing short-term foreign participation, even as broader inflows will continue to hinge on macro stability, rupee movement and consistency in tax policy.
Amit Majumdar, Group Chief Strategy Officer, Angel One Ltd, has said that F&O brokerage contributed about 44 per cent of gross revenue, while interest income from client funding and our broader platform accounted for around 33 per cent in Q3FY26, with the rest coming from cash and commodity broking, depository, distribution, and other income streams. “This diversified mix reinforces the resilience of our model and gives us confidence that the broader trajectory of our business remains firmly intact.”
More Like This
Published on February 1, 2026