The Union Budget 2026 is expected to uphold fiscal discipline while prioritising strategic, capital-intensive sectors, with defence emerging as the leading beneficiary, according to a report by investing platform smallcase.
The report noted that nearly 40 per cent of respondents in a pre-Budget survey flagged the defence sector for higher allocations.
Continued emphasis on indigenisation, military modernisation, export potential and sustained government spending is driving this optimism in the sector.
Infrastructure ranked second, with around 29 per cent of respondents expecting increased allocations.
The strong preference reflects confidence in public capital expenditure and its long-term multiplier effect on economic growth.
Equity managers surveyed indicated a clear tilt towards capex-led sectors, even as they anticipate some near-term volatility in the markets.
Despite short-term uncertainties, sentiment on Indian equities remains robust.
Over 82 per cent of fund managers expect the Nifty 50 to close FY27 above the 25,000 mark, with 43 per cent projecting it in the 25,000–27,500 range.
Inflation expectations also remain well-anchored, with more than 85 per cent of respondents projecting FY27 inflation at 4–5 per cent or lower.
Manufacturing accounted for about 18 per cent of sectoral preferences, supported by expectations of continued Production-Linked Incentive (PLI) support.
Consumption and agriculture received modest attention, indicating expectations of targeted interventions rather than broad-based stimulus.
On taxation, respondents largely expect incremental changes.
The government is unlikely to announce major corporate tax cuts but is more likely to offer targeted relief or simplification for salaried individuals, in line with its commitment to fiscal prudence.
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