As the Union Budget 2026 (FY27) approaches, market participants are closely watching for policy signals that could shape India’s economic and market trajectory over the next year. From infrastructure and defence to taxation reforms and emerging themes like AI and clean energy, expectations are running high across sectors. Here’s a detailed look at what the market is anticipating—and which companies could be in the spotlight after the Finance Minister’s announcements.
1. Infrastructure: Capex Remains the Growth Engine
Infrastructure spending is expected to remain the backbone of India’s growth strategy. Government Capital Expenditure (Capex) has steadily increased from ₹5.5 lakh crore in FY22 to ₹11.21 lakh crore in FY26, and investors are keen to see whether FY27 will deliver another meaningful jump.
Stocks to Watch:
Major beneficiaries could include Adani Group companies, Larsen & Toubro (L&T), Afcons Infrastructure, KEC International, and IRB Infrastructure. A strong capex push would also indirectly support steel and cement companies, driven by higher demand for raw materials.
2. Railways: Hope for a Comeback Budget
Railway stocks suffered last year after a largely flat budget allocation. This time, expectations are much higher, with a renewed focus on modernization, safety, and capacity expansion.
A key area of interest is the Kavach railway safety system, which is expected to receive greater emphasis.
Stocks to Watch:
RVNL, IRFC, Ircon International, RailTel, HBL Power (for Kavach-related orders), and CNX are likely to remain in focus.
3. Defence: Highest Expectations, Highest Volatility
The defence sector is carrying the strongest expectations this budget season. Reports suggest the Ministry of Defence is pushing for double-digit budget growth, driven by regional security concerns involving Bangladesh, Pakistan, and China.
Market View:
Defence stocks could see sharp volatility post-budget. A strong allocation may trigger rallies, while any disappointment could lead to quick profit-booking.
4. Income Tax, Housing & Consumer Relief
Middle-class tax relief remains a politically and economically sensitive area. Market expectations include:
Increase in standard deduction
Expansion of the 30% tax slab
Higher limits for Section 80C (₹2–3 lakh from ₹1.5 lakh)
Enhanced Section 80D health insurance deductions
Increase in home loan interest deduction from ₹2 lakh to ₹4–5 lakh
Stocks to Watch:
Such measures would benefit health insurance companies, real estate developers, and housing finance companies.
5. Share Market Regulations: STT & Capital Gains in Focus
Investors are hopeful for reforms in Securities Transaction Tax (STT) and potential changes in LTCG and STCG taxation. There is also curiosity around whether capital gains rules for Foreign Institutional Investors (FIIs) will be revisited.
Impact:
Any announcement in this area would affect the entire equity market, rather than a single sector.
6. Renewable Energy, Nuclear Power & AI Push
Following encouraging signals in the Economic Survey, the government is expected to make bold announcements around:
Green Hydrogen
Nuclear Energy
Clean Energy Infrastructure
Artificial Intelligence (AI) and digital innovation
Stocks to Watch:
Conglomerates like Adani Group and Tata Group, along with IT sector companies, could benefit from policy incentives and long-term vision announcements.
7. Exports, Textiles & Gems and Jewelry
Export-oriented sectors impacted by global trade disruptions and “Trump-era tariffs” are seeking relief and incentives to protect jobs and revive demand.
Stocks to Watch:
Textile manufacturers and gems & jewelry companies may gain if export-linked incentives are announced.
8. Commodities & Crypto: Policy Signals Awaited
Markets are also tracking potential changes in duties or regulations for gold and silver. In the crypto space, investors are watching closely to see if the current 30% tax and TDS regime is relaxed—though expectations remain muted given the government’s cautious stance.
Stocks to Watch:
Gold loan companies, Hindustan Zinc, Vedanta, and MCX (commodity exchange) could react to any policy shift.