Sensex Jumps 1,109 Points as Sitharaman Opens the Door to an LTCG and STT Debate

A few sentences from the Finance Minister did more for Dalal Street on Tuesday than a morning of strong IT earnings. The Sensex finished 1,109.10 points, or 1.54%, higher at 73,033.78, while the Nifty 50 rose 358.60 points, or 1.6%, to 22,721.95. Most of that gain arrived in the last 90 minutes of trade.

At 2 PM, the Sensex was up a comfortable but unremarkable 618 points at about 72,543. Within the next hour it had added roughly another 465 points. The trigger was a set of remarks by Finance Minister Nirmala Sitharaman on how India taxes equity investors.

What the Finance Minister Actually Said

Speaking at the Bloomberg New Economy Forum, Sitharaman was asked about the long-running complaint from market participants that India taxes stock investors twice: once through long-term capital gains (LTCG) tax on profits, and again through the securities transaction tax (STT) charged on every trade. She acknowledged that some investors argue the two levies overlap and that only one should remain, and said the government would be keen to hear those views. She also described the debate over STT as healthy.

Crucially, she did not commit to anything. Preparation for the next Union Budget has just started, she said, and this was not the right moment to say what she would or would not consider. She added that the broader aim of aligning tax treatment across asset classes is to bring them to parity rather than simply to raise the overall tax burden.

The market chose to hear the openness rather than the caution. For traders who have watched foreign investors pull more than Rs 3 lakh crore out of Indian equities so far in 2026, a record pace, even a hint that the tax drag on equities could ease was enough to spark buying.

A Rally Built on IT and a Few Heavyweights

Tuesday's gains did not come from tax hopes alone. IT stocks had already been rallying since the open after HCL Technologies reported a 21% rise in quarterly profit, and the Nifty IT index ended as the best-performing sector. HCLTech, TCS and Shriram Finance were among the top Nifty gainers, and HDFC Bank lent support. Realty and consumer durables also closed firmly higher.

Not everything rose. Nifty Pharma was the weakest sector, and smaller stocks lagged the benchmarks for much of the day, a sign that buyers stuck to large, liquid names. We covered the morning session, including RBL Bank's slide after its results, in our earlier report.

The Levels Traders Are Watching

Technical analysts said the Nifty's move above 22,600 and then 22,700 was decisive. They now see 22,800 as the next hurdle; a sustained close above it could open the way to the psychologically important 23,000 mark. On the downside, 22,600 is expected to act as the first support, with 22,300 below that. Tuesday's close effectively reversed Monday's loss of 157 points, when the Nifty ended at 22,363.35.

Why Caution Is Still Warranted

Markets have rallied on Budget hopes before, only to give the gains back when the actual Budget disappoints. Nothing announced on Tuesday changes what investors pay today, and any change to LTCG or STT would have to come through the Budget itself. Meanwhile, the pressures that have weighed on Indian stocks this year have not gone away: Brent crude is still above $100 a barrel, US bond yields are high, and foreign selling has been relentless.

Sitharaman also addressed the rupee, saying the Reserve Bank of India is focused on smoothing excessive volatility rather than defending any particular level, and that much of the currency's weakness over the past two years reflects external factors.

For now, Tuesday showed how sensitive a market starved of foreign buying is to any sign of policy relief. Whether that relief materialises will not be known until the Budget is presented.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.