The stock markets are still processing the Budget 2026 fine print amid geopolitical and policy-related developments at the global level. After a steep dive of over 1500 points on 01 February – the sharpest budget-day fall in six years, the Sensex is consolidating around the 80,000 level, while the Nifty is testing the 24,800 mark.
While most brokerages believe that the proposed hike in the securities transaction tax (STT) in the futures and options (F&O) segment is a harsh reality that investors will have to live with, they find the overall budget math credible and the proposals a step in the right direction.
Here's how leading brokerages and research houses have decoded the Budget 2026-27 proposals.
Bernstein
What we received instead was a largely academic budget, marked by marginal deficit reductions, continued increases in revenue expenditure, and a modest uptick in capex. While there were several sector-specific announcements aimed at stimulating investment, many were designed as long-term enablers rather than drivers of immediate growth.
Immediate tax boosters were notably absent, as the government had already introduced significant measures last year and remains committed to fiscal consolidation, albeit at a slower pace. The increase in STT for derivatives has dampened market sentiment, and the widely anticipated LTCG cuts did not materialize, further disappointing investors. The budget did whatever it could given the lack of policy flexibility.
Goldman Sachs
Policymakers continue to prioritize macro and market resilience over near-term growth spurts. This is evident from the steady fiscal consolidation and the timing of the securities transaction tax hike, likely aimed at curbing derivatives-market speculation, even at the cost of near-term equity upside.
The softer fiscal drag in the budget, along with steady capex spending was largely in-line with our expectations, and supports our fundamentally constructive view on Indian equities driven by earnings growth recovery to mid-teens. We do, however, anticipate near-term risk on valuations given already weak foreign sentiment further catalyzed by the unexpected timing of STT hike.
Over the medium-term, we see rising opportunities in areas of strategic importance and new infrastructure, including digital infrastructure/data centers, biotech, transportation corridors, nuclear power and critical minerals.
Morgan Stanley
A likely boost to capex, services sector growth and artificial intelligence (AI), along with slightly slower than expected fiscal consolidation, will likely support FY27 earnings, further helped by increased demand for equities through buybacks. We are Overweight Financials, Consumer Discretionary and Industrials.
Jefferies
Hike in STT is sentimentally negative. However, the impact on option/futures turnover is likely to be limited noting a similar increase in overall expenses in the July 2024 budget had limited impact on orders or participation. Our industry discussions indicate up to 5 per cent volume impact. We estimate a 5 per cent decline in ADTO/orders for BSE/GROWW could result in 4 per cent earnings impact.
Besides data center operators and capex beneficiaries (power equipment, cooling system providers, real estate players) will also be second order beneficiaries in the backdrop of policies for data centres. Tax benefits for datacenters (+ve Lodha) and safe harbor policies boost for GCCs (+ REITs) are key beneficiaries.
Given that there were some expectations of a potential duty hike for gold as per reports due to the sharp rise in gold price, the status quo comes as a relief. For PSU banks, there were expectations of announcement around M&A as well as hike in FDI limit from 20 per cent. Since the budget hasn’t touched those topics it may be seen as sentimentally negative.
Franklin Templeton
Hike in securities transactions tax (STT) on derivatives on futures and options is likely to have a negative impact on market volumes, which will have an adverse impact on the income of exchanges and brokers.
Though growth inflation dynamics appear reasonable, the higher borrowings for FY27 are likely to keep the pressure on bond yields. Investors in the debt segment are likely to benefit from accrual based short duration strategies and actively managed duration strategies.
Long-term equity investors may stay invested in broad diversified strategies like flexi-cap, multi-cap, multi factor, and large & mid cap equity funds. Those seeking smoother outcomes during volatility may choose hybrid options like multi asset allocation or balanced advantage funds to balance risk across asset classes.
Motilal Oswal Financial Services
Overall, the Budget arithmetic appears feasible. We expect the market to quickly discount the Budget and shift its focus to the trajectory of corporate earnings growth. We expect around 12 per cent earnings growth for Nifty over FY25-27E. Nifty valuation at 20.4x remain marginally below its long period average (LPA) at 20.8x 12-month forward earnings.
Overweight: Auto, Diversified Financials, Technology, Discretionary, and EMS; Neutral: PSBs, Healthcare, Capital Goods, Infra & Cement; Underweight: Private Banks, Staples, Oil & Gas, Utilities, and Metals.
 "From Jefferies to Goldman Sachs: Brokerages decode Budget 2026 fine print")
