Union Budget 2026: Finance Minister Nirmala Sitharaman is all set to present the Union Budget 2026 on Sunday, February 1, marking her 9th consecutive and 88th budget since Independence.
According to brokerage firm Bajaj Broking, the government’s overarching focus appears to be on sustaining structural growth while revitalizing domestic demand.
This follows recent policy moves such as GST rationalization and the sweeping income tax relief announced in the previous Budget, all while maintaining fiscal prudence.
“Against a backdrop of ongoing geopolitical instability and tariff -related disruptions, the government is expected to carefully balance its long-term infrastructure ambitions with the near-term imperative of cushioning the economy from external trade shocks,” the firm said in a note.
Here are the top five sectors that are likely to remain in focus in the Union Budget 2026 –
Below are the sectors that are likely to remain in focus in the Union Budget 2026, according to Choice Institutional Equities.
Defense sector
Defense spending is expected to rise by around 20% year-on-year, fueled by ongoing geopolitical tensions, the need for force modernisation, and a strong push towards indigenisation, according to the brokerage firm.
The allocation continues to remain capex-heavy, highlighting a structural shift from importing platforms to manufacturing long-cycle defense equipment domestically.
Several key programs are in the platform finalization phase, including Tejas Mk-2, QRSAM, and MRSAM. These initiatives are expected to receive execution approvals soon, offering multi-year revenue visibility for domestic defense manufacturers and further boosting the outlook for the sector.
Stock picks from the defense sector – Bharat Electronics, Bharat Dynamics and Data Patterns are among the top stocks.
Railway sector
Railways are expected to stay high on the agenda in this year’s Budget, although the rise in allocations may be more moderate than the steep increases of previous years.
The government is likely to maintain its emphasis on track expansion, electrification, signaling modernisation, station redevelopment, and improving freight efficiency.
Stock picks from the railway sector – PSU stocks like RVNL, IRCON International, Jupiter Wagons are among the top picks.
Infrastructure and real estate
The Infrastructure and Real Estate sectors are expected to remain key areas of focus, given their critical role in driving economic growth, generating employment and sustaining investment momentum.
“We expect the government to sustain elevated capital expenditure level (INR 11.21 Tn announced in the Union Budget FY 2025–26) to accelerate infrastructure and urban development,” the brokerage firm said.
Stock picks from the infrastructure and real estate sector – Sobha and Smartworks Coworking Spaces are among the top stock picks.
IT sector
The brokerage firm expects the budget to focus on accelerating domestic capacity creation through fiscal incentives, rationalized power tariffs, faster approvals and easier land access, supported by tax relief, duty waivers and green-energy benefits amid rising data consumption.
“We expect FY26 Budget to boost digital consumption through continued investment in digital public infrastructure, AI and cloud. With the digital economy growing from ~12% of GDP towards ~20% by FY30, tax relief, GST rationalization and clear data, cross-border and startup policies could drive monetization, scale-up and global competitiveness,” the firm said.
Stock picks from the IT sector – Tata Consultancy Services and Meesho are among the top picks.
auto sector
Bajaj Broking believes that the Union budget 2026 offers a clear opportunity for the Auto Sector to emerge as a key ‘powerlifter’ for the Indian economy.
“Focussed measures, such as enhanced incentives for EV manufacturing and exports, strengthening domestic component ecosystems will reduce import dependence. Targeted support for technology adoption and R&D could materially accelerate scale, competitiveness and long-term value-creation across the sector,” the firm said.
Stock picks from the auto sector – Mahindra & Mahindra, TVS Motor and Lumax Auto among top stock picks.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
