You missed the last wave, but the new budget is opening a bigger one.
- Union Budget 2026 signals sustained fiscal stimulus, fueling sector‑wide earnings upgrades.
- Foreign Institutional Investors (FIIs) have flipped to net buying, injecting ₹2,645 cr this month.
- Five hand‑picked stocks—Varun Beverages, Bharat Electronics, CAMS, Syrma SGS Technology, UltraTech Cement—show 12‑30% upside potential.
- Historical patterns suggest that post‑budget FII inflows precede a 4‑6 month rally in the Sensex and Nifty.
- Strategic entry on dips can lock in long‑term compounding while mitigating near‑term volatility.
Why the 2026 Union Budget Is a Catalyst for Indian Equities
The Finance Ministry’s 2026 budget packed three growth‑oriented pillars: a 7 % increase in capital expenditure, a 1.5 % reduction in corporate tax for SMEs, and a refreshed India‑U.S. trade framework that lowers tariffs on high‑tech components. Analysts estimate that these measures could lift GDP growth forecasts by 0.4 percentage points, a lift that the RBI promptly incorporated into its own outlook. A higher growth trajectory translates into stronger corporate earnings, especially for sectors that are capital‑intensive or export‑focused.
For investors, the budget’s impact is two‑fold. First, it creates a macro‑friendly environment that improves earnings forecasts across the board. Second, it reduces policy uncertainty—a key variable in discounted cash flow (DCF) models—allowing higher terminal value assumptions. The result is a re‑rating of many stocks from “hold” to “buy,” which we see reflected in the recent 1.5 % weekly gain of both the Sensex and Nifty 50.
Foreign Institutional Inflows: A Shift After Seven Months of Outflows
FIIs have been the swing factor for Indian equities since 2022. After seven straight months of net selling, February’s cash‑segment purchases of ₹2,645 cr signal a renewed confidence in the market’s upside. Historically, a reversal from net outflow to net inflow precedes a 4‑8 % rally in the broad indices within the next quarter.
Why the turnaround? The budget’s emphasis on infrastructure, combined with a softer RBI stance on interest rates, improves the risk‑reward calculus for overseas investors. Moreover, the India‑U.S. trade deal mitigates geopolitical headwinds, especially around technology transfers. The uptick in FIIs also brings more depth to the order book, narrowing bid‑ask spreads and providing better price discovery for retail investors.
Sector‑Level Trends: Beverages, Defence, Fintech, PCB & Cement
Beverage & Consumer: Varun Beverages (VBL) is capitalizing on a 40‑45 % capacity expansion that was under‑utilised in 2025 due to weather anomalies. With normal monsoons returning, volume growth can accelerate, especially as the company deepens its footprint in South Africa and prepares entry into Morocco and Zimbabwe. The broader soft‑drink market in India is projected to grow at 9‑10 % CAGR through 2030, driven by rising disposable income and a shift toward premiumization.
Defence & Aerospace: Bharat Electronics (BEL) benefits from a strategic push in the “Make in India” defence agenda. Near‑term orders worth ₹70‑80 bn across radar and missile systems create a visible revenue runway. Export potential is bolstered by the emerging India‑EU defence cooperation, which could lift the export share from low single‑digit levels to 10 % over the next five years.
Fintech & Asset Management Services: Computer Age Management Services (CAMS) dominates the mutual fund RTA space with an ROE (Return on Equity) north of 30 %. Non‑mutual‑fund revenue, currently 14.5 % of total, is projected to double by FY29, driven by digital onboarding and data‑analytics services for wealth managers. The fintech sector’s CAGR of 18 % reinforces CAMS’s growth trajectory.
Printed Circuit Boards (PCB): Syrma SGS Technology’s low‑volume, high‑margin PCB business has delivered a 350 bps EBITDA margin expansion YoY. The company’s foray into defence and solar inverters, along with a joint venture for bare‑board production, diversifies its revenue mix and aligns with the global shift toward renewable energy hardware.
Cement & Infrastructure: UltraTech Cement, the market leader, stands to gain from the multi‑year infrastructure pipeline outlined in the budget—roads, metros, ports, and housing. With capacity utilisation projected at 90 % in Q4FY26 and a net‑debt‑to‑EBITDA ratio targeted below 1.0, the balance sheet is strengthening, supporting dividend sustainability and future capex.
Deep Dive: The Five Long‑Term Picks and Their Upside Mechanics
Varun Beverages (VBL) – Current price ₹439.05, target ₹570 (≈30 % upside). The stock suffered in FY25 due to erratic weather that throttled demand. Capacity now sits idle at ~45 % utilization; once normal monsoons resume, the company can convert that excess into sales. International expansion into South Africa already adds ~8 % of revenue, and upcoming operations in Morocco and Zimbabwe are expected to contribute another 5‑7 % annually. The earnings per share (EPS) is projected to grow at a 15‑20 % CAGR through FY29.
Bharat Electronics (BEL) – Current price ₹429.65, target ₹520 (≈21 % upside). Order inflow for FY26 totals near ₹120 bn, with a pipeline extending to FY27 worth over ₹200 bn. Export ambitions tied to India‑EU defence deals could lift foreign‑currency earnings, reducing currency‑risk exposure. The company’s EBITDA margin is steady at ~12 % and is expected to improve as scale economies kick in.
Computer Age Management Services (CAMS) – Current price ₹722.40, target ₹840 (≈16 % upside). CAMS’s core RTA franchise yields an EBITDA margin of ~35 %. Non‑MF services are growing at 26 % CAGR (FY21‑26) and are forecast to reach ₹2.2 bn by FY26. Management’s FY29 revenue target of ₹4 bn implies a 11 % annual growth rate, supported by digital transformation projects for asset managers.
Syrma SGS Technology – Current price ₹868.60, target ₹1,000 (≈15 % upside). The order book of ₹64 bn (up 21 % YoY) underpins a revenue guidance of ₹1.6 bn for Q4FY26 and an EBITDA of >₹5 bn for FY26. The company’s strategic shift toward high‑margin industrial and automotive PCB segments, plus entry into defence, positions it to sustain a 30 % YoY revenue growth in FY27.
UltraTech Cement – Current price ₹12,722, target ₹14,200 (≈12 % upside). The firm’s Phase IV expansion, funded internally, will add ~10 % capacity by FY28. With infrastructure spending expected to rise 6‑7 % YoY, cement demand is set to stay robust. Debt reduction to sub‑1× net‑debt‑to‑EBITDA by FY26 enhances financial flexibility, supporting higher dividend payouts and share‑buyback opportunities.
Investor Playbook: Bull vs Bear Scenarios
Bull Case: The budget’s fiscal stimulus and trade deal trigger a 3‑4 % GDP acceleration. FIIs maintain net inflows, pushing the Sensex to breach 78,000 by Q4 2026. The five stocks rally in tandem, delivering 12‑30 % upside as earnings beat expectations and capacity utilization improves. Portfolio allocation to these picks could generate a compound annual growth rate (CAGR) of 14‑18 % over the next three years.
Bear Case: Geopolitical tensions flare, dampening trade optimism. Inflation remains sticky above RBI’s 4 % target, prompting a tighter monetary stance. FIIs reverse to net selling, dragging the indices down 5‑7 % in the short term. In this scenario, the stocks may under‑perform, but their strong balance sheets and sector tailwinds provide downside protection. Investors should consider partial exits or stop‑loss orders at 10 % below entry levels.
Bottom line: The convergence of a growth‑centric budget, renewed foreign capital, and sector‑specific catalysts creates a rare window for long‑term investors. By buying on dips and holding through the expected volatility, you position yourself to capture the upside that many missed.