Markets Plunge as Budget 2026 Announcements Trigger Sharp Sell-Off; PSU Banks and Metals Bleed

In a dramatic turn of events, the Indian equity markets shifted from a cautious start to a broad-based sell-off as Finance Minister Nirmala Sitharaman delivered the Union Budget 2026 speech. What began as a relatively flat Sunday special session quickly deteriorated into a "sea of red" as specific tax proposals and a global commodity rout spooked investors.

Benchmark Indices in Freefall

The headline indices saw a sharp reversal as the speech progressed. The BSE Sensex crashed by over 800 points, falling from its early highs to trade near the 81,400 mark. Similarly, the NSE Nifty 50 slumped by more than 270 points, breaching the critical support level of 25,050 to hover around 25,030. This volatility was heightened by the unusual nature of the trading session, being only the second time in history that the markets have operated on a Sunday to coincide with the Budget.

PSU Banks and Metals Lead Declines

The most severe damage was visible in high-beta sectors, with state-run banks and the metal industry bearing the brunt of the panic:

PSU Bank Stocks: This pocket was the worst hit, with the index slipping 4.5%. Major lenders like SBI and PNB saw significant profit booking as the market reacted to the lack of immediate "big-bang" reforms for the sector.

Metals & Commodities: The metal index plunged 3.7%. This decline was exacerbated by a historic crash in precious metals; gold and silver futures hit lower circuits earlier in the day, dropping as much as 6%. Stocks such as Hindustan Copper and Tata Steel were among the top laggards.

Energy and Banking: Energy stocks declined by 1.8%, while the Bank Nifty slipped 1.35%, reflecting a cautious stance on traditional energy firms and private lenders.

Defensive Pockets Show Resilience

Despite the overarching gloom, certain sectors managed to hold their ground. Pharmaceuticals (Sun Pharma, Max Health) and Defense (BEL) stayed in the green, supported by a ₹10,000 crore allocation for the biopharma sector and a continued push for indigenous defense manufacturing. Electronics manufacturers also found favor following the announcement of the India Semiconductor Mission 2.0 with a ₹40,000 crore outlay.

As the Finance Minister concludes the final sections of her speech, volatility remains high with the India VIX jumping nearly 3%. Traders are now closely watching if the Nifty can reclaim the 25,000 level to prevent further intraday slides.