How Budget 2026 impacts your investments: Stocks, gold and mutual funds

Increase in STT on derivatives transaction is sentimentally negative, while moving buybacks to capital gains taxation for individual should nudge companies towards this route.

If you invest in mutual funds, shares, gold or fixed-income products, the Union Budget 2026–27 doesn’t force you to change your strategy overnight. But it does quietly reward long-term investors and discourage shortcuts.

 

According to a report by Mirae Asset, the Budget focuses on stability, disciplined spending and long-term growth rather than short-term market excitement. There are no changes in personal income tax rates, so no immediate consumption surge.

 

Stability first

From an investor’s lens, the biggest comfort comes from what the Budget didn’t do. The government has stuck to its fiscal consolidation path, pegging the fiscal deficit at 4.3% of GDP for FY27, with debt-to-GDP continuing to trend lower. This signals policy stability, keeps borrowing in check, and reduces the risk of sharp interest-rate shocks—generally a positive backdrop for both equity and debt investors.

 

 

Equity investors: Stay invested, but be selective

 

If you invest in stocks or equity mutual funds:

 

• The government has increased spending on infrastructure, defence, railways, manufacturing and technology.
• Sectors like capital goods, defence, electronics, semiconductors, autos and consumption are expected to benefit over time.
• There are no big giveaways, so markets may not rally sharply—but fundamentals remain supportive.

 

However, if you trade frequently:

 

Derivatives trading (futures & options) just got costlier due to higher Securities Transaction Tax (STT).This mostly affects short-term traders, not long-term investors.

 

Buybacks & trading: Less tax tricks, more clarity

 

Share buybacks will now be taxed as capital gains, making taxation simpler and more transparent. This reduces tax arbitrage and helps investors better understand returns from corporate actions.

 

Public capital expenditure rises to ₹12.2 lakh crore, which supports sectors like infrastructure, defence, railways, capital goods and logistics.

 

Manufacturing and technology get a strong policy push—especially electronics, semiconductors, rare earths, biopharma and capital goods—which improves long-term earnings visibility in these themes.

 

Higher STT on F&O may curb excessive speculation but does not change the long-term equity story.

 

For investors, this nudges markets toward cleaner price discovery rather than quick trading profits.

 

Gold & Sovereign Gold Bonds: A clear line drawn

 

Gold investors should note a key shift. While there is no change for gold ETFs, the capital gains exemption on Sovereign Gold Bonds (SGBs) will now apply only if you bought them directly from the RBI at issue and held them till maturity.

 

If you bought SGBs from the secondary market expecting a tax-free exit, that advantage is gone. Gold still works as a hedge—but tax efficiency is now reserved for long-term primary investors 

 

Debt & bonds: Quietly constructive

 

For fixed-income investors, the signals are reassuring:

 

Government borrowing is in line with expectations

 

No major upward pressure on sovereign yields is anticipated

 

Steps like market-making frameworks and total return swaps for corporate bonds could deepen bond market liquidity over time

 

This improves the risk-reward balance for high-quality corporate bonds and debt funds, especially in a stable rate environment 

 

Overseas exposure & global investing

 

If you invest abroad or track global opportunities:

 

Portfolio investment limits for residents outside India have been raised

 

Remittance taxes for education and medical needs under LRS are reduced

 

IFSC-related tax incentives are extended, supporting cross-border financial activity

 

These changes marginally improve flexibility for globally diversified investors.

 

Impact on Investments

Financial Sector, Capital Markets and IFSC

• The financial sector agenda includes the setting up of a High-Level Committee on Banking for Viksit Bharat to align the banking system with future growth while preserving stability and inclusion.

 

• Public sector NBFC reforms will begin with the restructuring of Power Finance Corporation and Rural Electrification Corporation.

 

• Capital market measures include a market-making framework for corporate bonds, introduction of total return swaps on corporate bonds, and access to derivatives on corporate bond indices. Municipal bond markets are incentivised through a ₹100 crore incentive for single issuances exceeding ₹1,000 crore, alongside continuation of AMRUT support for smaller issuances.

 

• Portfolio investment limits for individual’s resident outside India are raised from 5% to 10%, with the aggregate limit increased from 10% to 24%.

 

• STT on Futures hiked from 0.02% to 0.05% and on Options Premium, Trading from 0.10% to 0.15% wef April 1, 2026.

 

• Buybacks for shareholders will be treated as capital gains with promoters liable to pay an additional buyback tax which will make the effective tax rate for corporate promoters @22% and non-corporate promoters @30%.

 

• For IFSC, the Budget proposes extending the period of tax deduction to 20 consecutive years out of 25 years for IFSC units and Offshore Banking Units, alongside rationalisation of applicable tax rates.

 

• A comprehensive review of the FEMA (Non-Debt Instruments) Rules is proposed to simplify and modernise the foreign investment framework, supporting cross-border activity through IFSC.

 

• Divestment target at Rs 800b for FY27, higher than 330b in FY26

 

• Remittances for education and medical needs under the Liberalised Remittance Scheme will also see a reduction to 2%  Sectoral View as per Mirae Asset:  

Auto: Sharp PLI increase and EV-focused policies strengthen long-term growth visibility; commercial vehicle demand supported by higher public capex.

 

Banks & NBFCs: MSME equity and liquidity support strengthened; PSU NBFC restructuring under consideration; tighter banking oversight; higher G-Sec yields may pressure margins.

 

Building Materials: Increased allocation to the Jal Jeevan Mission could spur demand.

 

Chemicals: Lower fertiliser subsidy is non-disruptive; duty cuts benefit select chemical segments.

 

Infrastructure & Defence: Capex growth driven by defence, railways and higher state transfers; strongest visibility in defence electronics, transmission and rooftop solar.

 

IT: Reduced operational hurdles for global capability centres (GCCs) support long-term investment; data-centre incentives and buyback tax changes improve return visibility and capital allocation flexibility.

 

Logistics: Long-term plans such as new freight corridors announced; no major near-term changes.

 

Metals: Higher capex and rail spending support demand; pipes and steel benefit in the near term, while rare earths offer long-term optionality.

 

Non-Lending Financials: STT hike marginally raises F&O trading costs; CTT unchanged; higher UPI incentives support service providers.

 

Oil & Gas: No change in excise duty structure.

 

Pharma: Ecosystem investments in biopharma and medical tourism are structurally positive.

 

Retail: No change in customs duty on gold.

 

Staples: Higher rural employment spending supports demand; no NCCD relief on cigarettes.

 

The bottom line for your portfolio

 

The FY27 Budget doesn’t demand a portfolio overhaul. Instead, it reinforces a familiar message:

 

Stay invested, stay selective

 

Focus on capex-linked sectors, manufacturing, defence, BFSI and consumption

 

Avoid strategies dependent on tax arbitrage or excessive leverage

 

Treat gold as a hedge—not a tax hack

 

In short, the Budget strengthens the foundation for long-term investing rather than offering quick wins—rewarding patience over speculation.