The Union Budget 2026-27, presented by Finance Minister Nirmala Sitharaman on February 1, 2026, focuses on sustaining high economic growth, maintaining fiscal discipline, and boosting infrastructure development. In a rare, historic move, the stock exchanges are conducting a special, full-day trading session on Sunday, February 1, to allow real-time market reactions to the policy announcements. 

Key Highlights & Economic Indicators (Budget 2026-27)

• Fiscal Deficit: The government has pegged the fiscal deficit at 4.4% of GDP for the upcoming fiscal year (FY26).
• Capital Expenditure (Capex): A massive push for infrastructure continues with a planned capital expenditure of Rs. 11.2 lakh crore.
• Tax Revenue: Gross tax revenues are projected at Rs. 42.70 lakh crore, representing an 11% growth over the previous year.
• GDP Growth: Nominal GDP growth is estimated at 10.1%, while real GDP growth is estimated at 7.4%.
• Debt Management: The government aims to keep the central government debt on a declining path as a percentage of GDP, with new fiscal policy measures effective from 2026-27. 

Key Sectoral Focus and Policy Announcements

• Infrastructure & Logistics: Development of seven high-speed rail corridors and rare earth corridors.
• Urban & Rural Development: A ₹1 lakh crore outlay for "Cities as Growth Hubs" and extension of the Jal Jeevan Mission until 2028.
• Energy & Power: Significant reforms to incentivize power distribution and enhance transmission.
• Manufacturing: The Production Linked Incentive (PLI) scheme remains a focus, with amendments to the Atomic Energy Act for private sector partnership.
• Digital & Tech: Furthering digital infrastructure and fintech innovations. 

Stock Market Impact (Sunday Session)

• Market Behavior: The stock markets (Sensex/Nifty) opened for a special session to digest the budget, with volatility expected.
• Performance: Historical analysis of the past 25 years shows a mixed, often negative, immediate bias on Budget Day, but strong recovery in the weeks following.
• Focus Areas: Investors are closely watching for changes in Securities Transaction Tax (STT), capital gains tax, and corporate tax, with recent trends showing volatility around these announcements. 

Strategic Analysis for Investors

• Long-term Focus: Analysts recommend not reacting immediately to short-term, "noisy" market volatility, but rather focusing on long-term structural, growth-oriented policies.
• Sectoral Picks: Focus on infrastructure, defence, and manufacturing-linked stocks, which often benefit from higher capital expenditure.
• Buy on Dips: With a focus on stability, a "buy on dips" strategy has been suggested for power and infrastructure stocks, such as Tata Power, Torrent Power, and GMR Power. 

The 2026 Budget aims to balance the need for infrastructure-driven growth with the necessity of fiscal consolidation in the face of global economic uncertainties.