BSE, Angel One shares recover after Sunday's sell-off; Groww continues underperformance

Shares of the Bombay Stock Exchange (BSE) Ltd., Billionbrains Garage Ventures Ltd. (Groww), Angel One Ltd. and other capital market names have had a choppy start to the trading day on Monday, February 2, after the Securities Transaction Tax (STT) was hiked by Finance Minister Nirmala Sitharaman during Budget 2026.

Shares of BSE are now up 4%, having declined up to 1.5% in the earlier part of the trading session. Angel One shares are also trading with gains of 2.5%, while those of Groww continue to trade with losses of over 3%.

The STT on futures was revised higher to 0.05% from 0.02% currently, while for that on options has been revised to 0.15% from 0.1% earlier.

As a result of the announcement, shares of BSE fell as much as 15% intraday before a minor recovery led to the stock ending with losses of 8%. Angel One shares fell 9%, while Groww declined close to 6%.

Jefferies in its note has highlighted that the move is a sentimental negative for these companies. Based on their discussions with industry experts, the brokerage projects a volume impact of up to 5% for these stocks.

"We expect a 5% decline in ADTO (Average Daily Turnover) / Orders for BSE / Groww and could result in a 4% earnings impact," the note stated.

Bernstein believes that the higher STT should hurt the profitability of high-frequency trading outfits but the question to ask is by how much, as these firms are a key client segment for Nuvama Wealth's services vertical. "If the higher STT meaningfully eats into the profit spread for the HFTs, this would reduce the Indian markets profit pool and thus hurt Nuvama, and vice versa," Bernstein wrote.

The brokerage went on to add that it is working towards gauging the impact, but the spreads for HFTs that remain market-neutral, will be more impacted compared to those who take directional calls.

Kotak Institutional Equities believes that the sharp STT hike in the F&O segment came as a surprise, although the STT hike in options may not be impactful due to volumes being influenced more by accessibility considerations.

However, the brokerage called the STT hike in futures to be "a bit unreasonable" given the greater institutional participation.

Lower STT on cash equities would have been more helpful to address the issue of disproportionate share of F&O volumes, Kotak said.

"For retail brokers, while January has been a strong month, await clearer trends to emerge from recent commodity price correction and overall trends in volumes & MTF book," the brokerage said.

According to Citi, Angel One and Groww have a higher F&O revenue mix and may see a marginal pressure on their topline, while for other capital market players, including Nuvama, the impact is likely to be minimal.

Shares of BSE worth over ₹4,000 crore were traded during Sunday's trading session, while for Groww, that figure stood at close to ₹1,500 crore.

Shares of BSE are looking to recover from the lows of the day, currently trading 0.2% lower at ₹2,567, while shares of Groww are down 2.5% at ₹164. Angel One shares are down 1.2% in early trading.