Budget 2026 Calls for Stability in the Stock Market over Speculation

This is not a budget that aimed to kick-start the markets through speculative trading cycles or provides instant gratification to equity markets. Rather, it is a budget that has its heart set on long-term capital formation, real-sector productivity; focus on key areas of the future economy and a consequent rebalancing of the growth model in India to move away from the dangers of over-financialization.

The government has proposed an increase in the Security Transaction Tax (STT) on futures and options trading in the stock market in the Union Budget 2026. STT on futures has been increased from 0.02 per cent to 0.05 per cent, a 150 per cent increase over the existing rate. Similarly, on option trading, there is an increase from 0.1 per cent to 0.15 per cent on the sale of options (premium) and 0.125 per cent to 0.15 per cent on the sale of options(exercised). This triggered a sudden sell-off on Dalal Street on February 1, 2026, the Budget Day, following an increase in STT. This response by the market, at first, may seem to be counterintuitive but is, in fact, completely expected and in line with the long-term goals of the economy and the self-sufficiency of the stock market.

 
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Trump's Tariff, the US Supreme Court and Its Impact on India

The US Supreme Court held that Trump could not impose general tariffs during peacetime under the International Emergency Economic Powers Act (IEEPA). IEEPA was the legal basis for the 18% reciprocal tariff on India and tariffs on other countries. This ruling by the US Supreme Court has effectively struck down the legal basis for the higher rate. India was paying only the standard MFN-style tariffs of 3.5% before Trump’s tariffs. This was a setback for President Trump, but the Trump Administration acted quickly to invoke Section 122 of the US trade law. This little-used provision allows the president to impose tariffs of up to 15% for 150 days, after which Congress must authorise an extension. Under the new rules, a flat 15% tariff is now applied to imports from all countries, including India, from February 24, 2026.

What has Changed Post the Court’s Ruling

The recent announcement by Donald Trump of a 15% “global” tariff on all countries, which came immediately after the US Supreme Court invalidated his previous tariffs imposed on an emergency basis, has upset the trade math calculations for India. What this means for India is that the earlier agreed-upon 18% reciprocal tariff, which was part of the Trump-Modi trade agreement, is now legally dubious, and in its place, a temporary 15% tariff will be imposed on Indian exports to the United States. The impact of this new development is that India will now be faced with a tariff rate that is lower than the 18% rate that was originally agreed to, but higher than the pre-Trump MFN rate of 3.5%.

India Joins Pax Silica

Until recently, it seemed that India was a thorn in America's eyes! However, today, the same America has made India a part of the US-led "Pax Silica" alliance! It may seem surprising to the average person, but this is how the world of diplomacy works. Every transaction here has a single objective: protecting the country's interests, and there are no friends or enemies.

The Pax Silica Alliance, though still evolving' is a US-led coalition focused on securing the global supply chain for essential minerals, semiconductors, and AI. India's participation in this alliance is important for both India and the US. America possesses AI technology, while India has a huge market for AI. So mutually beneficial for both.

Essentially, Pax Silica aims to create a trusted ecosystem from mining to microchips and from microchips to AI, reducing excessive dependence on a single dominant supplier. It also aims to reshape 21st-century technology-based geopolitics. However, it is implicitly a US effort to counter China's growing dominance in microchips and AI.

Indian IT Stocks have Tough Time Ahead

The stocks of Indian IT companies are bleeding following the launch of Anthropic, a new Artificial Intelligence (AI) model. The prices of stocks of Indian IT companies have fallen by more than 15% in the last one month. This AI model is capable of replacing software coders and programmers. Particularly in the case of the Indian IT sector, Software as a Service (SaaS) is the main business and revenue source. Such AI models are expected to make the Software as a Service (SaaS) business almost dead! For Indian IT companies, this is news which they never imagined but are now facing. This is a kind of Kodak Moment for the Indian IT sector! Nokia also experienced this and could never recover despite its complete dominance!

The said AI model and such other models are expected to completely disrupt and shake the global IT sector, and the ramifications may be even broader than assumed! However, there is also a possibility that the buzz around AI may prove to be hype, like initial opposition to calculators and computers!

As of now, for a person, AI and its impact on businesses and humanity may be a mystery. Numerous questions are floating around with no final answers. However, for the Indian IT sector, the AI models present a deflection point. People across India are wondering to find the answers to these questions: Why are the stocks of Indian IT companies bleeding on the stock exchanges? Is it just because of disruptive innovation? Or something else?

Budget 2025-2026: Modi Government's Big Bet on Youth

India's Union Budget 2026-27, presented by Finance Minister Nirmala Sitharaman on February 1, 2026, emphasized "youth-driven growth" to capitalize on the demographic dividend through education, skill development, and digital tools. The government has allocated approximately ₹1.4 lakh crore for the education sector in the 2026-27 budget. Key budget announcements include safe housing for female students, youth skill centers, and AI platforms like BharatVistaar, all aligned with the goals of a developed India.

Demographic Dividend as an Engine

Education, skills, youth, and students are crucial pillars of India's vision of a developed India. Translating our demographic dividend into a high-productivity workforce is not just an option but a necessity for becoming a developed nation by 2047. These not only promote inclusive growth, innovation, and economic resilience, but also align with India's ambitions of achieving a $30 trillion GDP and global leadership in services and manufacturing. The Union Budget 2026-27's education, skills, youth, and student schemes are built on this foundation. 

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Narendra Modi in the Epstein File: A Pressure Tactics

The US Department of Justice has released a large cache of documents relating to the Epstein Files, and some of those contain the name of Prime Minister Modi. No one knows the facts behind this so-called revelation, but one thing is crystal clear from the timing of this revelation. The trade negotiations between India and the US have been going on for a long and India has been stubborn and rejecting any possible entry of the US in the Indian agriculture and dairy sector, while the US wants India to open these sectors for American imports. The Trump Administration is under huge pressure from the dairy sector, and corn producers lobby after the Chinese strike on American exports of corn to China. The US is desperately searching for new markets for its agricultural products and dairy sector, and India is the largest market for these products.

Investment in Indian Companies is an Investment in the Indian Eonomy

Mark Mobious of Mobious Capital thinks that Sensex will soon touch the high of 1,00,000 points. Not only this, but he thinks that investment in Adani or any such companies is an investment in India!

Is it really so and that simple?

Truly speaking, yes. This is 100% correct. These companies are one of the three stakeholders of the Indian economy. Two other stakeholders are consumers/citizens and regulators/ government. It is the regulator's duty and responsibility to ensure that the interests of the two other stakeholders are taken care of while ensuring capacity and capabilities building in the economy. However, whenever there is any effort by the government to provide support to businesses, there are controversies. It's not a trend of the day but a historical fact! There is a political narrative out there that claims that the investment in companies, and particularly Adani, is corruption and perhaps a crime!

SJ-100 MoU to Revolutionise Indian Regional Aviation Sector

India's HAL and Russia's UAC have signed an MoU in Moscow to produce the SJ-100 commuter aircraft in India, under which India will have the rights to manufacture civil commuter aircraft SJ-100 for domestic usage. SJ-100 is a small commuter aircraft.

This will mark the beginning of a new era in India's civil aircraft manufacturing sector. This will lead to the development of indigenous aircraft technology in India in the long term. India has a history of improvising technology in such a way that it becomes cheaper while maintaining the quality. So, one can expect that India will soon produce cheap small aircraft.

Not Adani Group but India is Target

In modern times, assassinations are not aimed at killing the human body. Rather, the assassin focuses on killing the spirit and image of the person. In this process, they first create an alternative perception and narrative about the targeted entities/individuals. Once it is done, they try to erase the person.

The Deep State first employed the short trader Hindenburg, but it couldn't hurt much. Now, the Deep State has hired a better assassin, the Washington Post, to make a killing against an Indian MNC that strategically put forth the Indian interests in a dynamic geopolitical stage of drama.

They have been successful in creating an alternative perception about the Adani Group over the years. You ask any naive person on the road, and that person, with no hesitation, will charge the Adani Group with the allegations of corruption. You ask a single question, 'How?' and that person will fumble and possibly skip the question or run away!

Deepawali Season Sale and Indian Economy

Following the implementation of GST 2.0, consumption has revived in the Indian economy. Deepawali sales increased by 25% this year to ₹5.4 trillion in goods, from ₹4.25 trillion, excluding an additional ₹65,000 crore from services.

All this happened when there was a negative impact on the Indian economy due to Trump's tariffs on Indian exports. This also defies the fears of so-called economists that the three festivals, namely Durga Puja, Deepawali, and Chhath, falling in the same month will hurt this year's Deepawali sales. Bhai Duj and Chhath are yet to be celebrated!

Afghanistan Pakistan Conflict and the USA

The war between Afghanistan and Pakistan at the Durand Line has erupted is attracting the attention of the whole world. However, they have started, it seems that the US has begun implementing its grand plan to seize Bagram Airbase in Afghanistan, which the US vacated on 1 July 2021 after its occupation for 20 years.

The manner in which Pakistan has provoked Afghanistan and initiated unilateral aggression against Afghanistan clearly suggests that Pakistan received orders from US President Donald Trump to do so. Presently, President Trump has been showing his keen interest in Bagram Airbase. Pakistan is trying to please the American President by sacrificing its soldiers.

This conflict will likely drag on for longer than expected, and then, in the name of peace, the US will jump in and seize Bagram Airbase! If it happens in the future, Pakistan will not only fully cooperate with the US in this endeavour but will also put in all its efforts. Afghanistan has been cosying up to India, and it is upsetting for Pakistani establishments. They are not just uncomfortable but want to reverse it as soon as possible. However, at present, post Operation Sindoor, Pakistan is in no position to directly stop India in Afghanistan, so the best option left for it is intervention by the US which wants to get back to Afghanistan through Bagram Airbase.

India must Support Zoho

I have been noticing attacks on Zoho and its founder, Sridhar Vembu, none but by Indian citizens! Why are Indians opposing a homegrown tech company? Earlier, they did the same with Patanjali and Baba Ramdev!

Not for any particular reason, but because both companies got support from the Government of India! The GoI is endorsing them, and they are gaining traction. So, the people in opposition are duty-bound to oppose anything supported by the GoI!

For this group of people, it doesn't matter whether their behaviour hurts the national interests or not. What matters most to them is their high egos and fake feelings of being special!

Deloitte and Unethical Use of Artificial Intelligence

Suppose a company like Deloitte becomes dependent on AI for preparing reports that will ultimately influence government policies, which in turn affect the common person on the street. In that case, AI is not a helpful tool but a malaise. The situation at Deloitte had been so bad in the referred case that the company had to refund the Australian government! It must be noted that Deloitte is one of the Big Four!

Most companies are indeed providing numerous artificial intelligence tools to improve the productivity of the workers, and it is a good and wise decision. The use of AI is good towards this end. However, if, unfortunately, AI makes workers complacent, lazy and sometimes over-dependent on AI, then it is a very risky proposition. The problem is that AI uses the data that is available on the web, and consultancy is not about some kind of generalisation of task, but customised solutions. So what was done at Deloitte was not only completely unprofessional and unacceptable but also unethical.

Are Fees on H-1B Visas a Boon for India?

Sometimes, your biggest adversary (bane), who resorts to bullying, turns into your biggest friend (boon). The adversary in disguise who is out to help you achieve your goals.

The US has imposed a $100,000 annual fee for H-1B visas for foreign workers and a 3.5% tax on foreign remittances. This is a targeted decision. 71% of H-1B visas are held by Indian citizens, and a major portion of these visa holders send money back to India.

This decision by the US government will directly and adversely affect Indians aspiring to go to the US for a career. The brightest talents (students and professionals) have been migrating to the dreamland of the America to pursue their dreams which couldn’t find an ecosystem and environment in India. Not only this, but also the Indian government has been investing billions of dollars every year in these talents to educate and train them. This has resulted in increased costs for India. Apart from this, millions of dollars are flowing to the US for education in US universities and higher education opportunities.

GST 2.0 and the Indian Economy

GST 2.0 is a major revamp of India’s indirect taxation system with the aim of simplifying the GST regime, expanding the tax base, reducing the complexity of compliance, and stimulating consumption-driven economic growth. These reforms have largely rationalised GST slab rates by lowering the current four-tier structure (5%, 12%, 18%, and 28%) into a neater three-tier one: 5% for necessities, 18% for the general rate on most goods and services, and a new 40% slab on luxury and sin goods. This reform will be implemented from 22nd September 2025. It is expected to make the GST system more transparent, efficient and growth-oriented.

Simplification and Transparency

The proposed two-tier structure of 5% and 18% which covers most of the goods and services, while the 40% slab covers luxury and sin goods, is aimed to make the GST system simple for every stakeholder. Traders and businesses faced numerous challenges under the old regime due to overlapping and unclear rates, such as 12% versus 18% slabs or 18% versus 28%. The new regime looks simpler and neater with no confusion in compliance. It will bring down disputes, improving tax administration. It will bring down the compliance costs for businesses, particularly MSMEs.

Trump Unnecessarily Playing Victim Card

The US President Donald Trump is projecting the US as the greatest victim of India in trade in his social media post after the SCO summit 2025, which went well attended! He is trying to write a good script for a drama about his reckless foreign and trade policies gimmicks. However, the following are facts about the US trade with India and the rest of the world:

As far as the US trade deficits with its trading partners are concerned, there are some interesting and unusual facts.

US-India trade (exports and imports) was $212 billion in 2024, and a trade deficit of $41.5 billion. The US deficit with China is $270 billion, which is 128% of the total trade between the US and India. The US trade deficit with India is nearly one-fifth of the US trade deficit with China.

With the EU, this deficit is $161 billion, about four times that of the deficit with India. With other countries like Mexico, Vietnam, Taiwan, Japan, South Korea, Canada and Thailand, the US trade deficit is respectively $157 billion, $113.1 billion, $67.4 billion, $62.6 billion, $60.2 billion, 54.8 billion and $41.5 billion.

Trade Tensions, Tariffs, and the Future of Global Trade

“While world trade hit new peaks in 2024, uncertainty has increased as geo-economic tensions increase, supply chains are disrupted, and tariffs surge.” 

 

- UNCTAD, 2024

In 2025, the global trade environment is being defined by rising trade tensions and the return of tariffs as a leading economic policy weapon. As the world recovers from pandemic-related disruptions, nations are increasingly resorting to protectionism deploying national security, industrial sovereignty, and geo-economic strategy.

The New Wave of Tariffs

The governments have historically been using tariffs and non-tariff barriers as economic tools to protect their domestic industries from foreign competition or punish foreign countries. However, post-pandemic, there has been an increase in the tendency of some big economies to resort to tariffs. Global trade has been flourishing for a long time. More than sixty per cent of the global trade doesn’t attract any tariff, but the remaining trade is often subjected to very high trade tariffs and other non-tariff barriers. Agriculture, textile and dairy sectors are such areas where there are high trade barriers in the form of tariffs and non-tariff restrictions.

Impact of the US Tariff on India

India has become an important player in international trade since its integration with the global economy following liberalisation in the 1990s. According to World Bank data, India's trade-to-GDP ratio was 45% and its exports-to-GDP ratio was 21.2% in 2024. India mainly exports textiles, medicines and IT services while importing petroleum products and high-tech machinery. The USA has announced to impose 50% tariffs on Indian exports to the USA, which is a setback for the Indian economy.

Tariffs are in the alignment with mercantilist principles and aimed at protecting the domestic markets by matching the foreign trade barriers. However, according to the classical theory of trade (Ricardo), tariffs distort comparative advantage and increase consumers' costs, lowering welfare. So tariffs imposed by any country can, however, protect infant industries and balance out trade deficits. For India, an emerging economy with both mature and infant industries, the effectiveness of tariffs depends upon the extent, targeting, and tenure.

India's Protectionist Economy: A Shield in Need

Indian economy has traditionally been regarded as protectionist, with policies intended to shield local industry while exposing to healthy global competition. While some critics have argued that the approach suppresses growth and creativity, others argue that it is warranted because of the economic and social conditions in the country. The International Monetary Fund (IMF) projects India to grow at 6.4% in 2025, which clearly demonstrates the power and potential of India.

The protectionist policies have imposed a few non-tariff as well as tariff trade barriers, but not harmed the economy. Instead, India's growth story is one of incremental liberalization, with the government balancing to let in foreign investment while protecting national interest. The dairy sector is one such example, where India has not let itself be opened to foreign competition, lest it face the consequences on country-specific farmers and the rural economy.

The recent trade tensions with the United States have solidified India's protectionist stance. In the negotiations of the interim trade agreement, India did not acquiesce, rejecting proposals that accommodated American interests at the expense of Indian farmers and dairy farmers. The US had proposed allowing the entry of American dairy products, including non-vegetarian milk, which was seen as a threat to India's dairy industry. However, in the case of non-vegetarian milk, ethical considerations relating to religious sentiments is another important reason.

India Needs to be Tough with MNCs

When you are negotiating with a bully who is a narcissist, you need to confront wisely and skillfully; otherwise, the bully will keep creating ruckus for you. However, India has to tread very carefully as it has an opposition which is hell bent to down Narendra Modi at any cost. The Opposition wouldn't hesitate even if their actions would be damaging national interests because the same opposition has cheerleaders in the form of millions of supporters. However, India needs to be diplomatically strategic with multinational companies (MNCs) even if the opposition doesn't support this.

Microsoft has restricted Nayara. It cannot access its data. Whatever has happened in this case needs urgent attention from the government. India needs to take a tough stand against such MNCs which go against the interests of the Indian economy. The Nayara case is enough to show a tough face to Microsoft India. It must be made very clear to Microsoft India that it is registered in India and that it has to protect Indian interests first than to serve the American interests. The same message must be conveyed to other companies also.