Union Budget 2026: Stock Market Winners & Losers

The Union Budget 2026-27 was presented by India’s Finance Minister Nirmala Sitharaman on Sunday, 1st of February, 2026. The latest budget has sent ripples across the Indian financial landscape. With the government continuing its journey toward “Viksit Bharat,” the unwavering focus remains on capital expenditure, high-tech manufacturing, and fiscal consolidation. From an investors’ viewpoint, the Union Budget 2026 stock market impact has been a mixture of strategic optimism for industrial sectors and immediate caution due to changes in trading taxes and corporate structures.

Table of Contents

1. Introduction
2. Fiscal Deficit and Capex
3. List of 5 Winners: Sectors Poised for Growth

1. Data Centres and Cloud Infrastructure
2. Defense and Aerospace
3. Electronics and Semiconductors
4. Textiles and Apparel
5. Infrastructure and Logistics

1. List of 3 Losers: Sectors Facing Headwinds

1. Exchanges and Brokerage Firms
2. PSU Banks and Treasury Income
3. FMCG and “Sin” Goods

1. How Taxation Changes Will Impact Investors
2. Key Takeaways
3. Conclusion
4. Frequently Asked Questions (FAQs)

Introduction

The Union Budget is not a mere statement of accounts. It is the government’s primary policy tool to convey its economic priorities. In 2026, the budget arrived at a time when there is a backdrop of global uncertainty, though India has maintained its position as a “bright spot” in the global economy.

The Union Budget 2026 stock market impact was immediately visible on the trading floors. The benchmark Nifty 50 and Sensex witnessed initial volatility. There was even a dip of nearly 3% during the speech where the underlying message was one of long-term structural growth. The India government’s decision is to hike the Capital Expenditure (Capex) to a record ₹12.22 lakh crore. This demonstrates a “pedal to the metal” approach for building the nation’s physical and digital foundation.

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Fiscal Deficit and Capex

It was a successful balancing act by the Finance Minister between the need for growth and the necessity of fiscal discipline. The fiscal deficit for FY27 is projected at 4.3% of GDP. It is to be noted that it is down from the 4.4% projected in the previous year. This commitment to reducing debt levels is generally welcomed by global rating agencies. The best part is that it helps keep inflation in check, which is a positive sign for the long-term health of the equity markets.

The massive ₹12.22 lakh crore Capex target is a 9% increase over last year. This amount is earmarked for railways, roads, and newer frontiers like “Rare Earth Corridors” and “Biopharma Shakti.” When the government spends on this scale, it creates a multiplier effect benefitting dozens of ancillary industries, from cement to specialized software.

List of 5 Winners: Sectors Poised for Growth

Here’s the list of the 5 sectors that are all set to witness growth.

1. Data Centres and Cloud Infrastructure

A big surprise and a clear winner of this budget is the digital infrastructure space with the government announcing a tax holiday until 2047 for foreign cloud and data service providers using India-based data centres.

• Top benefit: This move catapults India as a global hub for data storage and AI processing.
• Stocks to Watch: Anant Raj Ltd (which saw a double-digit jump after the announcement), E2E Networks, and Netweb Technologies.

2. Defense and Aerospace

Defense remains a “golden child” of the Indian budget. With an 18% hike in Defense Capex, the focus has shifted from mere assembly to high-end indigenous technology. This includes jet engines and drones.

• Top benefit: The “Atmanirbhar Bharat” (Self-Reliant India) initiative comes with the advantage of multi-year order book visibility for domestic players.
• Stocks to Watch: Hindustan Aeronautics (HAL), Bharat Electronics (BEL), and Bharat Dynamics.

3. Electronics and Semiconductors

As a continuation of the success of PLI schemes, the government launched ISM 2.0 (India Semiconductor Mission). The outlay of this mission is ₹40,000 crore.

• Top benefit: The aim is to build the entire ecosystem right from chip design to manufacturing locally, thus reducing dependence on imports from Taiwan and China.
• Stocks to Watch: Dixon Technologies, Kaynes Technology, and Amber Enterprises.

4. Textiles and Apparel

The “Integrated Programme for the Textile Sector” and the creation of “Mega Textile Parks” aim to help Indian exporters compete with nations like Vietnam and Bangladesh.

• Top benefit: New export incentives and lower duties on specialized raw materials will boost margins for apparel makers.
• Stocks to Watch: Raymond, Welspun Living, and Trident.

5. Infrastructure and Logistics

The announcement of seven new high-speed rail corridors and dedicated freight corridors continues to favour the “Gati Shakti” theme. In addition to that, the “Coastal Cargo Promotion Scheme” targets doubling the share of inland waterways.

• Top benefit: Improved logistics efficiency directly reduces the cost of doing business in India.
• Stocks to Watch: Larsen & Toubro (L&T), RVNL, IRCON, and Shipping Corp. of India.

List of 3 Losers: Sectors Facing Headwinds

Here’s the list of 3 sectors that are expected to face challenges.

1. Exchanges and Brokerage Firms

The most immediate negative Union Budget 2026 stock market impact was felt by the capital market intermediaries. The government sharply increased the Securities Transaction Tax (STT) on derivatives.

• The Change: STT on Futures was hiked from 0.02% to 0.05%, and on Options from 0.10% to 0.15%.
• Impact: This move is designed to curb excessive retail speculation in the F&O segment. However, it directly hits the revenue of exchanges and discount brokers.
• Stocks Impacted: BSE Ltd, Angel One, and Motilal Oswal.

2. PSU Banks and Treasury Income

State-run banks faced selling pressure primarily due to the government’s record borrowing target of ₹17.2 lakh crore.

• Impact: Higher government borrowing can lead to rising bond yields. Since PSU banks hold large amounts of government bonds, a rise in yields leads to “Mark-to-Market” (MTM) losses on their treasury portfolios.
• Stocks Impacted: State Bank of India (SBI) and Bank of Baroda.

3. FMCG and “Sin” Goods

In this budget, there was a restructuring of tobacco taxation and an increase in excise duties.

• Impact: For a giant like ITC, this often translates into price hikes for consumers, which can dampen volume growth in the short term. Additionally, the lack of significant direct tax relief for the lowest income slabs meant there was no immediate “consumption booster” for rural India.
• Stocks Impacted: ITC and United Spirits.

How Taxation Changes Will Impact Investors

The Union Budget 2026 stock market impact is perhaps most personal when it comes to tax. While income tax slabs continues to be largely unchanged, it is to be noted that there are two major shifts:

1. Buyback Taxation: Buyback proceeds will now be taxed as Capital Gains instead of the earlier “deemed dividends.” This is a relief for retail investors as it avoids the higher slab rates, though promoters may face an additional tax burden.
2. Sovereign Gold Bonds (SGB): Tax exemptions on capital gains for SGBs are now restricted to original subscribers who hold until maturity. Those buying from the secondary market will no longer enjoy this tax-free exit.

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Key Takeaways

• Focus on Manufacturing: The transition from “Service-led” to “Manufacturing-led” growth is official. Keep an eye on companies benefiting from ISM 2.0 and the Electronics schemes.
• Infrastructure is Structural: Capex is no longer a one-time boost; it’s a decade-long trend. Diversified giants like L&T remain core portfolio plays.
• F&O Traders Beware: The hike in STT makes “scalping” and high-frequency trading more expensive. The government is nudging retail participants toward long-term investing.
• Quality over Hype: In a higher-tax environment for trading, picking quality stocks with strong earnings visibility is more important than ever.

Conclusion

The Union Budget 2026 stock market impact reflects a government that is confident in its long-term vision. However, the government is also cautious about short-term market excesses. By taxing speculation and rewarding long-term industrial capability, the budget sets the stage for a more mature Indian equity market. While certain sectors like brokerages and PSU banks might face a period of consolidation, the massive push in defense, electronics, and digital infrastructure offers plenty of “alpha” opportunities for the discerning investor. After reading this blog till the end, you might be super excited to become part of India’s growth story. If you are someone who is yet to try your hand at stock market and mutual fund investing, here’s the good news.

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