Opening Bell: Defence, Railways, PSU Banks in Focus as Sitharaman Presents Union Budget 2026

Indian equity markets are expected to open cautiously and be volatile today as Finance Minister Nirmala Sitharaman presents the Union Budget 2026, a defining policy event for FY27. Budget sessions typically see sharp sectoral churn rather than one-way index moves, with traders reacting to announcements on capital spending, fiscal discipline, and tax priorities.

With global cues mixed and valuations stretched in pockets of the market, today’s trade is expected to be headline-driven, with stock-specific action dominating rather than broad-based rallies.

Capex Continuity vs Fiscal Math

Markets are largely betting on continuity in the government’s capex-led growth strategy, which has been the backbone of earnings visibility across infrastructure, defence, and capital goods over the last three years.

In FY25, central government capital expenditure crossed ₹11 lakh crore, nearly double FY20 levels, and any indication that this momentum will be sustained in FY27 will be closely watched. At the same time, investors will track cues on fiscal deficit management, as slippage could pressure bond yields and rate-sensitive stocks.

Stocks and Sectors to Watch Today

Defence

Defence remains a structural theme, driven by indigenisation and export ambitions.

Stocks to watch:

• Hindustan Aeronautics (HAL)
• Bharat Electronics (BEL)
• Bharat Dynamics (BDL)

These companies have seen strong order inflows over the past year, with BEL and HAL reporting robust execution pipelines. Any budget push towards higher defence allocation or export incentives could keep these counters active.

Railways & Infrastructure

Railway and infrastructure stocks tend to react sharply to budget commentary on project spending.

Stocks to watch:

• Rail Vikas Nigam (RVNL)
• IRCON International
• IRFC
• Larsen & Toubro (L&T)

L&T, a bellwether for capex sentiment, remains a key proxy for government spending visibility. Railway PSUs, which have rallied strongly over the past year, could see either momentum continuation or profit-booking depending on allocation cues.

Also read: Union Budget and Dalal Street: A Decade of Market ...

PSU Banks

Public sector banks will track the budget’s borrowing programme and any guidance on credit expansion.

Stocks to watch:

• State Bank of India (SBI)
• Bank of Baroda
• Punjab National Bank (PNB)

PSU banks have delivered strong earnings growth over the last few quarters, aided by lower NPAs and steady loan growth. Stability in fiscal math and bond yields would be supportive for the sector.

Capital Goods & Industrials

Capital goods companies benefit directly from long-term infrastructure visibility.

Stocks to watch:

• Siemens India
• ABB India
• Cummins India

These stocks are sensitive to cues on manufacturing, energy transition, and infrastructure execution rather than just headline allocations.

Auto, EV, and Consumption Plays

Demand-side measures or EV-linked incentives could move select auto stocks.

Stocks to watch:

• Tata Motors
• Mahindra & Mahindra
• Maruti Suzuki

FMCG names such as HUL, ITC, and Nestlé India may act as relative defensives if budget announcements trigger broader volatility.

Market Tone

Budget Day trading is rarely about predicting direction. It is about interpreting policy intent versus expectations already priced into stocks. While a growth-focused budget could support sentiment, any surprises on taxation, subsidies, or fiscal consolidation could trigger swift stock-specific reactions.

For investors, today’s session will offer clarity on where government priorities lie for FY27, and which themes are likely to dominate the next earnings cycle.

Also read: Union Budget 2026 LIVE: Big Expectations On Defence Boost And Tech Push