Indian equity markets are expected to open cautiously and be volatile today as Finance Minister Nirmala Sitharaman presents the Union Budget 2026, a defining policy event for FY27. Budget sessions typically see sharp sectoral churn rather than one-way index moves, with traders reacting to announcements on capital spending, fiscal discipline, and tax priorities.
With global cues mixed and valuations stretched in pockets of the market, today’s trade is expected to be headline-driven, with stock-specific action dominating rather than broad-based rallies.
Markets are largely betting on continuity in the government’s capex-led growth strategy, which has been the backbone of earnings visibility across infrastructure, defence, and capital goods over the last three years.
In FY25, central government capital expenditure crossed ₹11 lakh crore, nearly double FY20 levels, and any indication that this momentum will be sustained in FY27 will be closely watched. At the same time, investors will track cues on fiscal deficit management, as slippage could pressure bond yields and rate-sensitive stocks.
Defence remains a structural theme, driven by indigenisation and export ambitions.
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These companies have seen strong order inflows over the past year, with BEL and HAL reporting robust execution pipelines. Any budget push towards higher defence allocation or export incentives could keep these counters active.
Railway and infrastructure stocks tend to react sharply to budget commentary on project spending.
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L&T, a bellwether for capex sentiment, remains a key proxy for government spending visibility. Railway PSUs, which have rallied strongly over the past year, could see either momentum continuation or profit-booking depending on allocation cues.
Public sector banks will track the budget’s borrowing programme and any guidance on credit expansion.
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PSU banks have delivered strong earnings growth over the last few quarters, aided by lower NPAs and steady loan growth. Stability in fiscal math and bond yields would be supportive for the sector.
Capital goods companies benefit directly from long-term infrastructure visibility.
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These stocks are sensitive to cues on manufacturing, energy transition, and infrastructure execution rather than just headline allocations.
Demand-side measures or EV-linked incentives could move select auto stocks.
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FMCG names such as HUL, ITC, and Nestlé India may act as relative defensives if budget announcements trigger broader volatility.
Budget Day trading is rarely about predicting direction. It is about interpreting policy intent versus expectations already priced into stocks. While a growth-focused budget could support sentiment, any surprises on taxation, subsidies, or fiscal consolidation could trigger swift stock-specific reactions.
For investors, today’s session will offer clarity on where government priorities lie for FY27, and which themes are likely to dominate the next earnings cycle.
