'Don't trust markets': What Deepak Shenoy says on STT, buyback, cryptos, SGBs
The Capitalmind AMC CEO said the increase in Securities Transaction Tax (STT) on futures proposed in Union Budget 2026 would not have a major impact on retail players.
- Feb 1, 2026,
- Updated Feb 1, 2026 4:56 PM IST
Market veteran Deepak Shenoy said investors should not trust markets too much on Sunday, noting that most institutional participants did not trade during the session. In a series of posts on X, the Capitalmind AMC CEO said the increase in Securities Transaction Tax (STT) on futures proposed in Union Budget 2026 would not have a major impact on retail investors, as arbitrage funds accounted for the bulk of futures activity. He said returns from arbitrage funds were likely to fall by about 0.5 per cent next year due to the higher STT.
Shenoy also noted that foreign portfolio investors typically bought stocks through futures because the impact cost was lower than cash market. These investors later allowed the futures positions to expire and convert into stocks. “This has a higher cost, about 4 basis points higher in the futures market. The remaining STT is largely the same,” he said.
Post market hours, Revenue Secretary Arvind Shrivastava said the hike in STT on futures and options was intended to discourage speculative tendencies and address systemic risk in the derivatives market.
The Budget proposed increasing the STT on futures contracts to 0.05 per cent from 0.02 per cent. In her Budget speech, Finance Minister Nirmala Sitharaman said STT on options premium and on the exercise of options were proposed to be raised to 0.15 per cent from 0.1 per cent and 0.125 per cent, respectively.
Addressing the post-Budget press conference, Shrivastava said speculative trading in futures and options had resulted in losses for small and retail investors, PTI reported.
“The government’s intention is to discourage speculative tendencies, and the increase in rate is essentially in that direction. It is meant to handle systemic risk in derivative markets,” he said, according to PTI.
To recall, SEBI studies in the past noted that 90 per cent of retail investors’ trades in the F&O segment suffered losses. The STT hike sent the Sensex plunging 2,370.36 points, or 2.88 per cent, to hit a low of 79,899.42. Nifty also fell 748.9 points, or 2.95 per cent, to 24,571.75, before recovering part of the losses later in the session.
Sensex eventually settled at 80,722.94, down 1,546.84 points or 1.88 per cent. Nifty ended the day at 24,825.45, down 495.20 points or 1.96 per cent.
On the buyback tax change, Shenoy said non-promoter investors could now offset the purchase price as a capital loss, as buybacks had been brought under the capital gains framework. He said the effective tax rate would be 20 per cent for short-term capital gains and 12.5 per cent for long-term capital gains. Promoters, he said noted pay tax at 30 per cent as individuals and 22 per cent as companies.
“This is big for employees holding shares, not ESOPs, meaning if you’ve exercised and bought shares, even in private unlisted companies. A buyback can be targeted to non-promoters who will effectively pay only 12.5 per cent long-term or 20 per cent short-term capital gains versus up to 39 per cent earlier,” he said.
On sovereign gold bonds, Shenoy said investors who had bought SGBs from the secondary market, rather than through primary issuance, would have to pay full capital gains tax at the time of redemption from April 1, 2026. He described the change as “very negative” for SGBs.
On cryptos, he said if an investor has not declared crypto assets, penalties at 200 per day and Rs 50,000 for inaccurate reporting will be applied.
Market veteran Deepak Shenoy said investors should not trust markets too much on Sunday, noting that most institutional participants did not trade during the session. In a series of posts on X, the Capitalmind AMC CEO said the increase in Securities Transaction Tax (STT) on futures proposed in Union Budget 2026 would not have a major impact on retail investors, as arbitrage funds accounted for the bulk of futures activity. He said returns from arbitrage funds were likely to fall by about 0.5 per cent next year due to the higher STT.
Shenoy also noted that foreign portfolio investors typically bought stocks through futures because the impact cost was lower than cash market. These investors later allowed the futures positions to expire and convert into stocks. “This has a higher cost, about 4 basis points higher in the futures market. The remaining STT is largely the same,” he said.
Post market hours, Revenue Secretary Arvind Shrivastava said the hike in STT on futures and options was intended to discourage speculative tendencies and address systemic risk in the derivatives market.
The Budget proposed increasing the STT on futures contracts to 0.05 per cent from 0.02 per cent. In her Budget speech, Finance Minister Nirmala Sitharaman said STT on options premium and on the exercise of options were proposed to be raised to 0.15 per cent from 0.1 per cent and 0.125 per cent, respectively.
Addressing the post-Budget press conference, Shrivastava said speculative trading in futures and options had resulted in losses for small and retail investors, PTI reported.
“The government’s intention is to discourage speculative tendencies, and the increase in rate is essentially in that direction. It is meant to handle systemic risk in derivative markets,” he said, according to PTI.
To recall, SEBI studies in the past noted that 90 per cent of retail investors’ trades in the F&O segment suffered losses. The STT hike sent the Sensex plunging 2,370.36 points, or 2.88 per cent, to hit a low of 79,899.42. Nifty also fell 748.9 points, or 2.95 per cent, to 24,571.75, before recovering part of the losses later in the session.
Sensex eventually settled at 80,722.94, down 1,546.84 points or 1.88 per cent. Nifty ended the day at 24,825.45, down 495.20 points or 1.96 per cent.
On the buyback tax change, Shenoy said non-promoter investors could now offset the purchase price as a capital loss, as buybacks had been brought under the capital gains framework. He said the effective tax rate would be 20 per cent for short-term capital gains and 12.5 per cent for long-term capital gains. Promoters, he said noted pay tax at 30 per cent as individuals and 22 per cent as companies.
“This is big for employees holding shares, not ESOPs, meaning if you’ve exercised and bought shares, even in private unlisted companies. A buyback can be targeted to non-promoters who will effectively pay only 12.5 per cent long-term or 20 per cent short-term capital gains versus up to 39 per cent earlier,” he said.
On sovereign gold bonds, Shenoy said investors who had bought SGBs from the secondary market, rather than through primary issuance, would have to pay full capital gains tax at the time of redemption from April 1, 2026. He described the change as “very negative” for SGBs.
On cryptos, he said if an investor has not declared crypto assets, penalties at 200 per day and Rs 50,000 for inaccurate reporting will be applied.