Feb 1 (Reuters) - Indian shares slumped on Sunday after the federal budget proposed hiking the securities transaction tax (STT) on derivatives and offered no major measures to attract foreign investment.

The Nifty 50 fell 1.96% to 24,825.45, while the BSE Sensex lost 1.88% to 80,722.94, marking their worst budget-day performance in six years.

Fifteen of 16 major sectors ended in the red. The small-caps and mid-caps slid 2.7% and 2.2%, respectively.

India's Finance Minister Nirmala Sitharaman pitched the budget as a renewed push for manufacturing-led growth amid a volatile global backdrop.

While the budget focused on development, including "a sharply higher defence allocation and a manufacturing push to several sectors, it stopped short of the firepower that could have delivered immediate excitement for markets," said Trideep Bhattacharya, president and chief investment officer of equities at Edelweiss Asset Management.

The market drifted lower during the session after the government proposed to sharply raise STT on futures to 0.05% from 0.02% and on options to 0.15% from 0.1%. Analysts warned the move could weigh on market activity.

"Futures are a margined, risk-managed product and not typically the primary source of retail excess, which raises questions on whether higher STT will deliver the desired outcome or instead weigh on liquidity," said Pranav Haridasan, managing director and chief executive officer at Axis Securities.

Exchange operator BSE fell 7.8%, while brokerage firms Angel One and Groww dropped 9% and 5.1%, respectively.

The absence of significant incentives for foreign investors, who have withdrawn $23 billion from local equities since the start of 2025, also hurt sentiment.

"At a time when India needs to deepen market liquidity and attract global flows, raising frictional trading costs sends the opposite signal," said Jimeet Modi, founder and chief executive at SAMCO Group.

Among other sectors, state-owned banks slid 5.6% after no fresh divestment-related measures were announced, while defence stocks retreated 5.1%. They rallied nearly 9% in the four sessions ahead of the budget.

IT was the lone gainer among major sectors, rising 0.6% after the government said that share buybacks would be taxed as capital gains, a move analysts see as favourable for cash-rich tech companies.

Digital payment stock Paytm rose 1.9% on enhanced incentives for the UPI real-time payments system.

Textile stocks Gokaldas Exports, Arvind, KPR Mill and Vardhman Textiles jumped 2%-11% as the government proposed setting up of mega textile parks.

(Reporting by Bharath Rajeswaran and Vivek Kumar M in Bengaluru; Editing by Janane Venkataraman, Sonia Cheema and Nivedita Bhattacharjee)

By Bharath Rajeswaran and Vivek Kumar M