India raises stock derivatives trading tax, Indian stock market falls in response

Glonghui, February 1st｜India has increased certain stock trading tax rates in an effort to further curb retail speculative trading. According to the budget proposal submitted to parliament on Sunday, the Indian government has raised the securities transaction tax on stock index futures from 0.02% to 0.05%. The tax rate on option premiums and option exercises has been increased from 0.1% to 0.15%. This news triggered a sharp decline in the stock market, with India's main stock index, the NIFTY 50, plunging nearly 3% intraday. Shares of the Bombay Stock Exchange (BSE), India's second-largest securities exchange, as well as brokerage stocks including AngleOne, also fell sharply. This move marks India's determination to curb speculative trading. Previously, a massive influx of retail traders had made India the world's largest market for contract trading volumes of such products. At the end of 2024, regulators introduced several restrictive measures, including limiting each exchange to only one weekly index options contract.