Budget 2026 Lifts Markets: Sensex Soars 400 Points on Capex Push

Introduction to Budget Day 2026

Indian equity markets responded positively during a special Sunday trading session as Finance Minister Nirmala Sitharaman presented the Union Budget for the fiscal year 2026-27. In her record ninth consecutive budget presentation, key policy announcements, particularly a significant increase in capital expenditure, fueled investor sentiment. The benchmark indices, BSE Sensex and NSE Nifty 50, climbed to their day's high, reflecting optimism over the government's growth-oriented fiscal roadmap.

Market Opens with Caution and Volatility

The trading day began on a cautious note. Despite a flat pre-opening session, the Nifty 50 briefly slipped below the 25,300 mark after initial gains. Market volatility was evident as the India VIX, a gauge of expected price swings, surged by over 4.5 percent. This initial uncertainty reflected investor apprehension ahead of the finance minister's speech. Sectoral indices showed a mixed opening, with the Nifty Metal index leading losses, while Defence and PSU indices remained in the green on expectations of continued government support. However, as the budget announcements began to unfold, the market sentiment shifted decisively, leading to a broad-based recovery.

Major Announcements Driving the Market

The primary catalyst for the market rally was the government's proposal to increase public capital expenditure (capex) for FY26-27 to ₹12.2 lakh crore. This substantial allocation is aimed at accelerating infrastructure development, which is expected to have a multiplier effect on the economy by boosting related sectors and creating employment. This announcement signaled the government's commitment to sustaining economic growth through public investment.

Another significant policy measure was the allocation of a ₹40,000 crore outlay for the electronics manufacturing sector. This move is designed to bolster domestic production, support Electronics Manufacturing Services (EMS) companies, and strengthen India's position in the global supply chain. The government also announced plans to restructure Power Finance Corporation (PFC) and REC Limited to improve their operational efficiency in financing India's power and infrastructure projects.

Sectoral Gainers and Laggards

The budget proposals triggered sharp movements across various sectors. Electronics manufacturing stocks were among the top beneficiaries. Shares of Dixon Technologies, Kaynes Technology, Syrma SGS, and Amber Enterprises rallied up to 5 percent immediately following the announcement of the increased outlay for the sector.

Defence stocks also saw strong buying interest, with companies like Bharat Electronics and Hindustan Aeronautics rising up to 5 percent. This rally was driven by investor expectations of higher allocations for defence modernisation and indigenisation. Similarly, shares of PFC and REC gained nearly 3 percent after the restructuring plans were revealed.

Textile stocks also rallied as the Finance Minister proposed the development of mega textile parks to add value to the sector. In contrast, shares of the Multi Commodity Exchange of India (MCX) experienced a sharp decline, falling over 12 percent during the session, marking it as a notable laggard on an otherwise positive day.

Key Budget Day Market Data

Government's Strategic Focus

Finance Minister Nirmala Sitharaman highlighted six key priority areas for the government. These priorities include scaling up manufacturing in seven strategic sectors, revitalising legacy industries, and creating a supportive ecosystem for small and medium enterprises (SMEs). The budget also emphasised a sustained push for infrastructure development and measures to ensure long-term economic and strategic security. This framework indicates a clear focus on balancing high growth with macroeconomic stability.

Market Analysis and Outlook

The market's positive reaction was largely driven by the government's clear emphasis on growth through capital expenditure. The substantial capex outlay is seen as a direct stimulus for sectors like construction, cement, and capital goods. The targeted support for electronics manufacturing aligns with the 'Make in India' initiative and is expected to attract further investment into the sector. While the market has historically been volatile on Budget Day, the clear policy direction and growth-focused announcements provided investors with confidence. The focus now shifts to the implementation of these proposals and their on-ground impact on corporate earnings and economic activity in the coming quarters.

Conclusion

The Union Budget 2026 successfully buoyed market sentiment, with key indices closing near their intraday highs. The government's commitment to boosting infrastructure and domestic manufacturing through significant financial outlays has been well-received by investors. As the details of the Finance Bill are absorbed, the market will continue to track the execution of these policies, which are set to shape India's economic trajectory for the upcoming fiscal year.