<div id="readability-page-1"><div id="contentdata"> Indian equity markets head into the Union Budget with cautious positioning and rising sensitivity to policy signals. With Finance Minister Nirmala Sitharaman set to present the FY27 Budget on February 1, benchmark indices remain locked in a pre-event consolidation phase, reflecting a market that is waiting for clarity rather than chasing momentum.The Nifty has largely traded in a narrow range amid a volatile global backdrop marked by renewed tariff risks under a potential Trump 2.0 presidency and persistent geopolitical tensions.Domestically, growth expectations for FY26 hover between 6.5 and 7 percent, while investors are closely tracking how the government balances fiscal consolidation with the need to sustain economic momentum.That trade-off becomes even more critical after FY26, when the Centre committed a capital expenditure outlay of Rs 11.21 lakh crore, roughly 3.1 percent of GDP, representing a nearly 10 percent increase over earlier estimates. With volatility already elevated, markets are increasingly focused on execution rather than intent, making the upcoming Budget a potential inflection point for sentiment.Here are five Budget measures that could exceed expectations and fuel a post-Budget rally:1) Bigger Infrastructure-Led Capex PushA sharper-than-expected increase in capital expenditure, in the range of 10 to 15 percent, taking total capex to Rs 12 to 12.5 lakh crore, or around 3.2 percent of GDP, with a strong focus on infrastructure, could emerge as the single biggest positive trigger for markets.Tejas Khoday said infrastructure spending is no longer optional. “If the government meaningfully increases capital expenditure, particularly in infrastructure, it can immediately lift sentiment because this is where India’s biggest bottlenecks lie,” he said. “For manufacturing to become globally competitive, capex needs to rise sharply. Without sustained spending on roads, railways, ports and maritime routes, the ecosystem simply doesn’t scale.”Ranjit Jha added that public sector investment often sets the tone for the broader cycle. “When the government leads on capex, private players gain confidence and that’s when markets respond,” he said.Public capex is widely estimated to have a multiplier effect of 1.5 to 2 times on GDP, while also reducing logistics costs that remain elevated compared to peers such as China. Strong execution visibility typically benefits cyclical sectors such as cement, steel, capital goods and construction, supporting broader sector re-rating.2) Targeted Push for High-Growth Strategic SectorsMarkets are also watching for sharper policy focus and higher budgetary allocations toward long-term structural growth themes. Above-trend spending on defence, clean energy, railways, AI, data centres, manufacturing and R&amp;D, along with refinements to PLI schemes and FDI norms tied to technology transfer, could revive thematic momentum.Vikas Gupta outlined where expectations are building. “Defence, railways, clean energy, infrastructure, housing, AI, strategic minerals and manufacturing linked to technology transfer are all likely focus areas,” he said. “Sectors aligned with these themes tend to see heightened activity around the budget, especially if allocations surprise on the upside.”Khoday added that innovation-led industries require sustained policy backing. “Incentivising and subsidising R&amp;D can have a direct impact on sectors like IT and pharma,” he said, arguing that targeted support could help companies move up the value chain instead of competing purely on cost.3) Measures That Put More Money in Consumers’ HandsWhile capex supports medium-term growth, near-term market sentiment continues to hinge on consumption recovery. Any move that boosts disposable income, whether through a higher standard deduction, modest slab rationalisation or better-targeted transfers, could revive demand across FMCG, auto and retail sectors.Unlike indirect measures such as GST rationalisation, markets are looking for direct income-side relief that translates into immediate spending power.Ranjit Jha put it succinctly: “If the government pumps money into the hands of common people, demand automatically follows,” he said, pointing to consumption as the missing link in the current recovery cycle.4) Capital Gains Tax StabilityFor equities, sometimes the strongest positive trigger is the absence of negative surprises. Clear signals of stability on capital gains tax and Securities Transaction Tax, along with any simplification or marginal relief, could play a critical role in sustaining domestic investor confidence.Khoday cautioned against using capital markets as a revenue lever. “The biggest impediment to growth would be further taxing the capital market ecosystem,” he said. “Adding stress here risks demoralising investors and weakening India’s capital formation engine. Ultimately, it is domestic investors who fund Indian companies, and that flow needs stability, not uncertainty.”With foreign investors still selective, domestic mutual fund flows and retail participation have become the backbone of market liquidity. Tax predictability helps preserve risk appetite and valuation support in a market that is no longer cheap.5) Export and Trade Support Through Customs RationalisationAs global supply chains continue to realign, any push on trade facilitation through customs duty rationalisation, export incentives or progress on strategic bilateral agreements could provide a boost to export-oriented sectors.Ranjit Jha highlighted several emerging opportunities, citing growing momentum around EU-India engagement, expanding defence cooperation with the UAE and disruptions in competing export hubs such as Bangladesh’s textile industry. “These are openings India can capitalise on, provided policy support aligns,” he said.With global growth remaining uneven, India’s attractiveness as a manufacturing and export base improves when input costs fall and trade access expands. Export-linked sectors such as textiles, gems and jewellery and defence manufacturing stand to benefit both on margins and volumes.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.</div></div>

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Indian equity markets are cautiously positioned ahead of the FY27 Budget presentation on February 1. Key triggers for a potential post-Budget rally include a significant increase in capital expenditure, targeted support for high-growth sectors, measures to boost consumer disposable income, stability in capital gains tax, and customs rationalization to support exports. Analysts emphasize the importance of execution over intent, with a focus on infrastructure spending and consumer demand as critical factors for market sentiment.

Budget 2026 Playbook: 5 triggers that could ignite a post-Budget market rally