Feb 1 (Reuters) - Indian shares slid in a broad-based sell-off on Sunday after the federal budget hiked the securities transactions tax for derivatives trading and disappointed investors by offering no major measures to attract foreign investments.
The Nifty 50 was down 0.7% at 25,140, while the BSE Sensex lost 0.61% to 81,766.42 as of 1:24 p.m. IST.
Thirteen of the 16 major sectors traded lower. The broader small-caps and mid-caps tumbled 1.9% and 1.2%, respectively.
The Indian government proposed to raise the securities transaction tax (STT) steeply on futures to 0.05% from 0.02% and to 0.15% from 0.1% on options.
"The increase in STT on derivatives is a negative for markets as it can reduce liquidity. Furthermore, lack of relief on STT for cash market investments and measures to attract foreign investments were the big negatives," said Ambareesh Baliga, an independent market analyst.
Krishna Bhimavarapu, APAC economist at State Street Investment Management, said the budget does not materially alter the investment case for foreign investors in the near term.
Exchange operator BSE fell 6.3%, while brokerage firms Angel One and Groww lost 6% and 9%, respectively, on higher trading costs for derivatives.
State-owned banks tumbled 3.6% on a lack of major measures related to divestments.
Defence stocks also slid 3.3%, following an 8.8% rise in the last four sessions ahead of the budget.
IT stocks rose about 1%, bucking the broader trend.
India's annual budget made a fresh bet on the country's manufacturing sector as Finance Minister Nirmala Sitharaman laid out priorities for Asia's third-biggest economy and pledged to accelerate growth amid a volatile global environment.
(Reporting by Bharath Rajeswaran and Vivek Kumar M in Bengaluru; Editing by Janane Venkataraman, Sonia Cheema and Nivedita Bhattacharjee)
By Bharath Rajeswaran and Vivek Kumar M
