Investing.com -- India's Finance Minister, Nirmala Sitharaman, on Tuesday announced a significant hike in the Securities Transaction Tax (STT), increasing it from 0.01% to 0.02%.This doubling of the tax rate will have a substantial impact on Futures and Options (F&O) traders, who will now face a considerably higher tax burden on their trades.

The market reacted sharply to this news on July 23, with benchmark indices Sensex and Nifty dropping by over 1% each in the afternoon. Despite the initial plunge, Sensex managed to recover and end the day in positive territory.

However, the broader market remained under pressure, with major sectoral indices such as Nifty Bank, Nifty Oil&Gas, Nifty Realty, Nifty PSU Bank, and Nifty Financial Services all registering declines of more than 1%.

By the close of trading on Tuesday, shares of the Nifty 50 ended lower by 0.13%, reflecting the broader market's cautious sentiment in response to the new tax policy.

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