- Radhika Gupta’s one‑line rule: Do nothing in a volatile market, and you’ll likely win.
- Budget 2026 raises STT on futures and options, a cost that can erode short‑term gains.
- The India‑US trade pact sparked a ₹13 lakh‑crore wealth jump in minutes.
- Sector‑wide ripple effects mean banks, IT and pharma will feel the shock differently.
- Historical parallels show that calm investors outperformed the hype‑driven crowd.
Most investors panic when headlines scream “tax hike” or “trade deal”. That’s the exact moment you should stay the course.
Edelweiss Mutual Fund's Calm‑Storm Rule
Radhika Gupta, chief of Edelweiss Mutual Fund, posted a stark reminder on X: action during heightened volatility is often pricier than you think. She urged investors to ignore both FOMO and FOFA (fear of falling assets), keep their original asset allocation, and avoid the temptation to chase the latest market noise.
Why it matters: When transaction costs rise, every trade you make eats into returns. The simple math is: higher STT + bid‑ask spreads + market impact = lower net performance. By sitting tight, you let the market’s natural drift work for you rather than against you.
Budget 2026 STT Hike: Immediate Market Fallout
The Finance Minister announced an increase in Securities Transaction Tax (STT): futures from 0.02% to 0.05%, options premiums from 0.10% to 0.15%, and exercise of options from 0.125% to 0.15%. While the percentage change looks modest, on a ₹10‑trillion daily turnover it translates to an extra ₹5‑10 billion in taxes.
Higher STT discourages short‑term speculative trading, which can reduce liquidity and widen spreads. For long‑term investors, the impact is muted—especially if they hold through the tax change without rebalancing. The key takeaway: the tax hike is a cost of action, not a cost of patience.
India‑US Trade Deal: Catalyst for a 13 Lakh‑Crore Wealth Surge
Just hours after the budget announcement, the market surged. Nifty 50 touched 26,341 and the Sensex 85,871, adding roughly ₹13 lakh crore to investor wealth within the first 15 minutes of trade. The spark? Confirmation of a comprehensive India‑US trade agreement that trimmed U.S. tariffs on Indian goods to 18% and opened new avenues for U.S. agricultural, energy and technology exports to India.
The deal removes the “biggest stumbling block” for foreign capital inflows, according to the Chief Economic Advisor. Foreign Portfolio Investors (FPIs) have been net sellers of about $12 billion since August 2025; the trade pact could reverse that trend, bringing fresh capital into equity markets.
Sector Ripple Effects: Banks, IT, Pharma
Even though the headline numbers are dazzling, the underlying sector dynamics are where the real opportunities lie.
- Banking: Lower tariffs improve export‑linked credit demand, boosting loan growth. Major banks are likely to see a modest uplift in net interest margins as corporate borrowing rises.
- Information Technology: The “China + 1” strategy gains traction, with U.S. firms looking to shift a share of their software and services contracts to Indian vendors. Expect higher order books for Tier‑1 IT firms.
- Pharmaceuticals: A reduced U.S. tariff floor makes Indian generics more price‑competitive in the American market, potentially widening export volumes.
Competitors such as Tata Capital, Adani Ports, and Infosys are already repositioning their balance sheets to capture the inflow. Watching their earnings guidance will give you a clearer picture of where the capital is flowing.
Historical Parallel: 2013 Budget Shock & Investor Behavior
In 2013, India introduced a similar STT increase on futures. The immediate reaction was a 4% dip in the Nifty, followed by a 7% rally over the next six weeks as investors realized that the higher tax simply weeded out high‑frequency traders. Those who held their positions through the dip outperformed by an average of 2.3% on a risk‑adjusted basis.
The lesson repeats: market shocks create short‑term noise but rarely alter long‑term fundamentals. Patience, not panic, is the better strategy.
Investor Playbook: Bull vs Bear Scenarios
Bull Case
- FPI inflows resume, pushing the Nifty above 28,000 within 12 months.
- Banking and IT earnings beat expectations, driving sectoral multiples higher.
- STT hike stabilises volatility, creating a more predictable trading environment.
Bear Case
- Geopolitical tension reignites, causing a reversal of the India‑US optimism.
- Higher STT squeezes thin‑margin traders, leading to a liquidity crunch.
- Domestic political gridlock stalls further trade liberalisation, dampening FPI enthusiasm.
Regardless of which scenario unfolds, the core principle remains: avoid unnecessary trades during the turbulence. Let your diversified portfolio ride the wave, and you’ll preserve capital while positioning yourself for the upside that follows.