Pre-budget: Union Budget 2026 — What Should You Watch for as an Investor and Household?

Union Budget for FY 2026–27 will be presented on 1 February 2026 at 11:00 AM by Finance Minister Nirmala Sitharaman, marking her ninth consecutive budget. For the first time in India’s history, the Budget will be presented on a Sunday and stock exchanges will hold a special trading session to respond to announcements in real time. Given the potential for heightened volatility during this live event, strictly following risk management rules for trading will be essential for active participants.

Whether you are a salaried employee trying to manage monthly expenses, a homeowner servicing a loan, a retiree dependent on fixed deposits or an investor tracking market movements, even without tracking the entire Budget 2026 speech, paying attention to a few high-impact announcements is sufficient. Here is what households and investors should closely watch in the Union Budget 2026.

What Investors Should Watch in Union Budget 2026

(1) Fiscal Numbers and Borrowing Plan

Investors should closely track the government's fiscal deficit target and its gross borrowing plan. And these numbers indicate how responsibly the government manages its finances. Any sign of weaker fiscal discipline than expected can push bond yields higher, necessitating a clearer understanding of debt capital market dynamics, which in turn affects interest rates, market valuations and rate-sensitive sectors such as banking, real estate and infrastructure.

The fiscal framework sets the overall tone of the Union Budget and often determines how markets react, making it crucial for investors to understand how to analyse stocks based on fundamentals and broader market trends. Both investors and households should pay close attention to:

• Fiscal deficit target for FY 2026–27
• Government’s total borrowing requirement
• Long-term debt-to-GDP trajectory

(2) Receipts Statement: How Government Plans to Raise Funds

Receipts Statement explains how the government intends to fund its expenditure during the financial year. It provides a detailed breakup of revenues expected from taxes, asset sales and borrowings. These projections offer important signals about tax policy stability and fiscal sustainability.

Investors and households should closely track the following components:

• Direct tax collections, including income tax and corporate tax
• Indirect taxes, such as GST, customs duty and excise duty
• Disinvestment and asset monetisation plans
• Market borrowing estimates

Aggressive disinvestment targets can influence PSU stock prices, while higher than expected market borrowings may affect liquidity conditions and interest rates.

(3) Expenditure Statement: Where the Money Will Be Spent

The expenditure statement details how the government plans to allocate its spending across various sectors.

Key areas to watch include:

• Capital expenditure, covering infrastructure, railways and defence, etc.
• Social sector spending, such as health, education, housing and food security

From an investor’s perspective, higher capital expenditure is supportive of long-term economic growth and corporate earnings.

(4)  Capital Gains Tax Relief (LTCG & STCG)

Capital gains taxation remains one of the most closely watched aspects of the Union Budget. Any removal or reduction in other taxes like the STT - Securities Transaction Tax can also meaningfully reduce the cost of investment.

Investors should watch for:

• Revisions in LTCG or STCG tax rates
• Changes in holding period definitions
• Adjustments to exemption limits

(5) Sector-Wise Expectations and Market Impact

• Manufacturing & MSMEs: Policy support and easier credit can benefit industrial and export-oriented stocks. For example, recent trends in the auto ancillaries sector highlight how specific policy tailwinds can drive performance.
• Railways: Higher spending supports infrastructure, logistics and engineering companies.
• Healthcare: Increased allocation aids pharma, diagnostics and hospital operators.
• Agriculture: Increased allocation in agriculture, improving rural demand and opportunities in agri-linked stocks.
• Real Estate: Housing incentives support can help developers & housing finance firms.
• Green Energy: Focusing on renewables & EVs can influence green energy stocks.
• Defence: Higher spending benefits domestic defence manufacturers and PSUs.

What Households Should Watch in Union Budget 2026

(1) Tax Slabs, Standard Deduction and Section 80C

Households should look first at any changes to income tax slabs either in the old tax regime or new tax regime. A comparison should be made to evaluate tax benefits in both the regimes before choosing the best fit for an individual. Even a modest increase in the standard deduction or higher ceilings for certain deductions directly increases monthly take-home pay and annual tax savings.

(2) Direct Benefits: Subsidies, Fuel, Fertiliser and Food

Announcements on subsidies like cooking fuel, fertiliser or changes to indirect taxes (GST rationalisation) affect household budgets more than people realise. Any relief on cooking gas, public transport concessions or food subsidies will be felt immediately by low and middle income families.

(3) Social Schemes, Health and Education

Allocations to health like Ayushman Bharat, education and skilling influence out of pocket cost trends. And for families planning large expenses like education & medical, increased outlays or targeted schemes can ease future budgets. 

(4) Housing and Home-Loan Relief

People should watch for changes in home-loan interest deductions and affordable housing incentives. Any increase in deduction limits can reduce the after-tax EMI burden for homebuyers and improve housing affordability.

Stock Market Trend on Budget Day - Last 15 years

Here’s how Nifty and Bank Nifty reacted on the last 15 Budget Days:

NIFTY BANK – Budget Day Performance (Since 2010)

NIFTY 50 – Budget Day Performance (Since 2010)

Source: BusinessToday

Conclusion

Ahead of the Union Budget 2026, investors & households should focus on measures which can truly impact finances rather than headline announcements. Fiscal discipline, tax stability, capital spending and sector specific support will shape the Budget’s real outcome.
Households should watch for changes in tax & housing benefits while investors should track capex plans and capital gains for market direction. Reviewing financial plans in advance—such as evaluating SIP vs. lumpsum investment options—can help respond better once the Budget is announced.

FAQs

Is the Indian stock market open on Budget Day 2026?

Yes,despite falling on a Sunday, stock market will remain open through a special trading session announced by the exchanges.

What are the market timings on Budget Day?

Market timings are expected to follow normal hours, opening at 9:15 AM and closing at 3:30 PM.

Which market segments will be open on Budget Day?

All major segments will be open, including equities, derivatives, currency derivatives and commodities such as MCX.

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