The Union Budget has always been a moment of reset, where policy intent meets economic ambition. As Budget 2026 approaches, sector-level attention sharpens across markets and boardrooms.
The government keeps its focus on capital expenditure in Budget 2026, expecting a rise of 10–15% from the current ₹11.21 lakh crore, aiming allocation of around ₹12 trillion, which aims to stimulate the private and public sectors of the economy. This keeps infrastructure, railways, manufacturing, and related sectors in focus while reinforcing the government’s role as the primary driver of growth.
Read this blog further for more information on the Top 8 sectors experts are closely watching in Budget 2026.
Top Sectors Experts Closely Watching in Upcoming Budget 2026
The upcoming Budget 2026 focuses on the sectors such as defence, infrastructure & railways, renewable energy, BFSI, housing, and MSME. Keep reading for more details!
Infrastructure & Railways
Infrastructure remains the main driver for growth in India. The public capex might stay focused on roads, railways, defence, and power infrastructure.
In the previous budget, capex was increased to ₹11.2 lakh crore for FY 2026, with allocation of ₹2.52 lakh crore for railways and ₹2.72 lakh crore for roads. The analysts expect a 9-10% higher allocation YoY for the Ministry of Road Transport & Highways.
The Centre is also considering a ₹25,000 crore buffer for infrastructure projects. Some infrastructure stocks, such as Larsen & Toubro, Siemens India, BHEL, UltraTech Cement, Ambuja Cement, and railway stocks like RVNL, IRCON International, Jupiter Wagons, shall be in focus.
Defence
Defence stays on the Indian government’s radar every Budget. While the sector delivers strong returns, defence stocks have corrected 15–20% from recent peaks as execution concerns have surfaced.
The market anticipates 8–10% growth in defence spending for Budget 2026, rather than a sharp jump. Additionally, recent geopolitical developments, such as Operation Sindoor, have kept the sentiment supportive. However, high-order backlogs demand timely execution.
Renewable Energy
India’s renewable energy sector is moving faster, and another key focus in Budget 2026. The country currently has around 267 GW of non-fossil fuel capacity, which means around half of its total power mix comes from renewable sources, such as solar, wind and hydro.
India targets to reach 500 GW by 2030, requiring nearly ₹30 lakh crore of investment, which draws interest from global investors.
The renewables capex for FY26 is expected to be strong, driven by policy support and capacity additions. The renewable energy stocks include players like Adani Green Energy, NTPC, Tata Power and NHPC, which have the scale and projects needed to benefit from the next phase of green spending.
BFSI (Banking & Fintech)
Before Budget 2026, the BFSI sector is focused on improving credit flow and asset quality. While employment and lending grew in the mid-to-high single digits in 2025, rising stress in personal and auto loans and weak MSME credit remain concerns. The banks and fintechs are asking for stronger credit guarantees, easier co-lending, continued support for digital payments, simpler compliance, and incentives to deepen insurance and pension coverage.
Additionally, the Fintech market in India is expected to grow at a CAGR 20% by 2030, making space for long-term investing. This might favour banking sector stocks include players like SBI, HDFC Bank, Bank of Baroda, and ICICI Bank.
Affordable Housing
The affordable housing segment is another sector investors are watching for Budget 2026. The analysts expect raising home loan interest deduction under Section 24(b) to ₹4–6 lakh, redefining affordable housing limits to ₹75–85 lakh in metros and ₹60–65 lakh in non-metros, and revamping PMAY subsidies for middle-income buyers.
The major players in the affordable housing space include Aavas Financiers, India Shelter Finance Corporation, Aadhar Housing Finance, and GIC Housing Finance, which are closely linked to policy support, PMAY incentives, and housing loan demand in the lower- and middle-income segments.
MSME
Micro, Small and Medium Enterprises (MSMEs) account for around 30% of GDP, contributing to 35% of manufacturing output and making 45–46% of exports, while employing 100 million to 290 million people, in FY 2025-26.
The industry expectations include easier credit access without heavy collateral, simpler compliance through digital tools and e-invoicing, and faster onboarding on platforms like TReDS, GeM and ONDC. There is also demand for district-level support cells to help micro units scale up and a trade resilience fund to cushion MSMEs against export and supply-chain shocks.
Manufacturing and Exporters
India’s manufacturing now contributes about 17 % of GDP, with strong exports in electronics, pharmaceuticals and autos, but high tariffs from key markets like the US are weighing on growth. Experts want the Budget to push more Production-Linked Incentive (PLI) schemes, customs duty rationalisation, faster GST refunds and measures that cut input costs and improve ease of doing business.
Export-oriented industries are also looking for targeted support like export credit, tax relief and logistics incentives to help Indian goods stay competitive overseas. Structural reforms that align trade deals and strengthen supply chains are seen as key to turning manufacturing momentum into sustainable export growth.
Gokaldas Exports, Avanti Feeds, Apex Frozen Foods, Welspun Living are some stocks to keep track of.
Technology and EV
Technology and electric vehicles are highlighted in the 2026 budget. EV adoption is already moving past early stages, with total sales crossing 2.3 million units in the previous year, showing a clear sign that adoption is growing.
For the upcoming budget, continued investment in charging infrastructure, clear GST and customs policies, and strong backing for programmes like PM E-DRIVE, with about ₹10,900 crore set aside through 2028, are top priorities. These moves could help in bringing down costs, drive local EV part manufacturing, and strengthen both EV and broader tech ecosystems.
Watch for the stocks of Maruti Suzuki, TVS Motor, Eicher Motors, Bajaj Auto and Hero MotoCorp that might be the key beneficiaries.
Conclusion
Budget 2026 is shaping up as a policy-heavy, execution-focused event, with capital spending and sectoral continuity.
From infrastructure and defence to clean energy, BFSI, housing, MSMEs, manufacturing, technology and EVs, the emphasis stays on areas that can sustain growth, crowd in private investment, and strengthen domestic capacity.
For investors, the budget signals fewer surprises and more long-term direction, where allocations, clarity on incentives, and follow-through on reforms will matter more than short-term announcements.
