Budget day trading guide: As the Indian stock market remains volatile despite a landmark India-EU free trade agreement, the focus of investors has shifted to the mega-event- the Union Budget 2026, to be presented by the Finance Minister Nirmala Sitharaman on February 1.
The Budget session of Parliament began on Wednesday, 28 January. The Finance Minister will present the Budget on Sunday after the Economic Survey of India is presented on Thursday.
While mixed Q3 earnings, FII selling, and geopolitical noise dominate market sentiment, the Budget remains a strong factor for the domestic market.
Investors and traders appear busy speculating what their trading and investing strategy should be for the Budget day.
Budget day trading guide: Focus on fundamentals
Experts say the Union Budget is expected to focus on growth and fiscal consolidation. However, it may not have strong measures to boost consumption. Policy announcements may not trigger a sharp up-move in the market unless there is significant tax relief.
“Announcements on the housing front, especially affordable housing and taxation relief to FPIs, can change market sentiment,” said Pankaj Pandey, the head of research at ICICI Securities.
Experts say that the market is witnessing stock-specific behavior amid the Q3 results season. They suggest long-term investors should remain on the sidelines ahead of the Budget.
“This appears to be a stock-picker’s market, which is more suited for traders. Long-term investors should remain on the sidelines for now, given the lack of clarity on key macro issues, particularly the India–US trade deal,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
Vijayakumar said investors who are willing to take selective exposure can focus on domestic-centric sectors such as defense and capital goods.
“These sectors are less dependent on global trade and could benefit from domestic policy support and government spending,” said Vijayakumar.
According to Ajit Mishra, SVP of Research at Religare Broking, investors can consider selective buying in equities.
“The Budget could offer better entry levels if there is disappointment, especially since the market is not expecting major reforms. Expectations are quite muted—otherwise, we would have seen a pre-Budget rally, which hasn’t happened,” Mishra said.
However, he was quick to add that if there are any positive surprises, such as relief measures for market participants—like a securities transaction tax (STT) cut or changes to long-term capital gains (LTCG) taxation—it could act as a positive trigger.
The market is also expecting selective sectoral support, particularly for beaten-down sectors like textiles and export-oriented industries.
Mishra believes developments such as the EU–India trade deal and targeted Budget support could serve as short-term catalysts for these sectors.
However, broad-based buying is unlikely.
“The market is currently focused on corporate earnings, which have been mixed this quarter. As a result, a selective investment approach is more suitable,” said Mishra.
Brokerage firm Motilal Oswal Financial Services believes there may be focus on higher capex across sectors such as defense, infrastructure, affordable housing, power, capital goods, etc..
Higher allocation to the PMAY scheme and an increase in government capex may benefit some cement stocks, Motilal Oswal said.
Measures such as a reduction of LTCG, the reintroduction of indexation benefit for debt mutual funds, no further increase in STT, and further tax slab widening and higher standard deduction may benefit AMCs, RTAs, and wealth managers, said Motilal Oswal.
According to Motilal Oswal, the following key stocks and sectors are likely to benefit if expectations play out:
L&T, ABB, Siemens, Hitachi, Siemens Energy, KEC, Bharat Electronics, Bharat Dynamics, HAL, Ultratech, JK Cement, Polycab, KEI, Crompton, Titan, PN Gadgil, Niva Bupa, AMCs, RTAs, most HFCs, MFIs, Infra players, IGL, Mahanagr Gas, Gujarat Gas, Petronet LNG, GAIL, Waaree, Premier, NTPC, Tata Power, Acme, NTPC Green, Brigade, Prestige, Sobha, Lodha, and Godrej. Properties.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
