A pre-Budget survey of more than 50 smallcase managers shows a clear pecking order of expectations: defence spending is seen as the biggest winner from higher government allocations, infrastructure is a close second, and despite anticipated near-term volatility, a decisive majority of managers are betting the Nifty 50 will end FY27 well above current levels, with a large cohort pencilling in levels north of 27,500.
The annual survey, conducted by smallcase and released on Thursday, suggests Union Budget 2026 is expected to “stay the course” on fiscal prudence even as it reinforces a capex-led growth strategy. That mix of discipline on the deficit paired with targeted spending has left managers broadly constructive on Indian equities’ medium-term trajectory.
Defence and infrastructure lead the wish list
Nearly 40% of respondents flagged defence as the sector most likely to benefit from higher Budget allocations, making it the clear frontrunner. Managers cited drivers such as indigenisation under Atmanirbhar Bharat, modernisation of the armed forces, export potential and sustained government spending.Infrastructure followed with about 29% of responses, reflecting confidence that public capex will continue to act as a growth multiplier across the economy. Manufacturing drew roughly 18% of votes, underpinned by expectations of ongoing policy support through production-linked incentive schemes. Consumption and agriculture lagged far behind, at about 7% each, signalling expectations of targeted support rather than a broad-based stimulus.
Bullish on Nifty, cautious on the event
Despite concerns about short-term turbulence, managers remain optimistic about where the market is headed. More than 82% expect the Nifty 50 to close FY26–27 above 25,000. Within that, 43% see the index in the 25,000-27,500 range, while nearly 39% project levels between 27,500 and 30,000.
That confidence coexists with caution around the Union Budget itself. Almost 80% of managers anticipate near-term volatility around the announcement, driven by event-based positioning, policy surprises and global cues. Most, however, expect any swings to be short-lived, with fundamentals such as earnings growth and liquidity conditions reasserting themselves after the event.
Inflation anchored, taxes steady
Macro assumptions underpinning those bets appear stable. Over 85% of respondents expect FY27 inflation to be in the 4-5% range or below 4%, reinforcing confidence in policy continuity and a predictable operating environment.
On taxation, expectations are modest. The survey points to limited scope for sweeping corporate tax cuts, with managers largely expecting stability on that front. Targeted relief or simplification for salaried individuals is viewed as more likely, alongside continued emphasis on capex-linked incentives and compliance. In consumption, respondents foresee selective measures to support urban and rural demand rather than a broad fiscal push, in line with fiscal discipline.
For investors bracing for the Budget’s immediate impact, the message from managers is clear: expect noise in the short run, but the big bets remain firmly anchored in capex-heavy sectors and a bullish view of India’s equity market over the medium term.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)