The Union Budget 2026–27 has created strong movements in the Indian stock market. While some sectors received a big boost from higher government spending and policy support, others faced pressure due to tax changes and lack of direct incentives. Investors are now closely watching how these budget announcements will shape sector performance in the coming months.

This article explains which stocks and sectors are likely to benefit and which may struggle, along with the reasons behind these movements.

Overall Market Reaction After Budget 2026

The market saw volatility immediately after the Budget announcement. Traders reacted to increased transaction taxes in derivatives, while long-term investors focused on infrastructure spending, manufacturing growth, and economic reforms. The Budget clearly signals a long-term growth approach, but short-term market movements remain mixed.

📈 Sectors and Stocks with Positive Impact

1. Infrastructure Stocks

Why Positive:
The government announced record capital expenditure focused on roads, railways, urban development, and logistics. Large infrastructure projects create strong order pipelines for construction and engineering companies.

Benefits for Stocks:

• Higher government contracts
• Multi-year revenue visibility
• Strong growth outlook

Type of Companies That Benefit:

• Road construction firms
• Engineering and EPC companies
• Infrastructure developers
• Heavy machinery suppliers

2. Cement and Building Materials

Why Positive:
Infrastructure and housing projects increase demand for cement, steel, and construction materials.

Benefits for Stocks:

• Rising sales volumes
• Better capacity utilization
• Pricing power improvement

Companies Likely to Gain:

• Cement manufacturers
• Ready-mix concrete companies
• Construction chemical producers

3. Capital Goods and Engineering

Why Positive:
The Budget focuses on industrial growth, manufacturing expansion, and domestic production. This increases demand for industrial machinery and capital equipment.

Benefits for Stocks:

• Increase in private and government orders
• Growth in factory and plant setups
• Expansion of industrial infrastructure

4. Semiconductor and Electronics Manufacturing

Why Positive:
The government is strengthening the semiconductor mission and electronics manufacturing ecosystem to reduce imports and boost exports.

Benefits for Stocks:

• Incentives for chip manufacturing
• Growth in electronics production
• Strong long-term demand

Industries Benefiting:

• Electronics manufacturers
• Chip design firms
• Component suppliers

5. Healthcare and Hospital Stocks

Why Positive:
Budget 2026 includes expansion of healthcare infrastructure, medical training, and medical tourism.

Benefits for Stocks:

• Increase in hospital capacity
• Rising demand for healthcare services
• Investment in medical facilities

6. Defence Manufacturing (Long-Term Positive)

Why Positive:
Higher defence allocation and focus on domestic production support defence manufacturers.

Benefits for Stocks:

• Larger order books
• Growth in indigenous defence production
• Long-term revenue visibility

Note: Some defence stocks fell initially due to profit booking, but long-term fundamentals remain strong.

📉 Sectors and Stocks with Negative Impact

1. Stock Broking and Trading Platform Stocks

Why Negative:
The Budget increased Securities Transaction Tax (STT) on derivatives trading. This raises trading costs.

Impact on Stocks:

• Lower trading volumes
• Reduced brokerage income
• Pressure on profit margins

2. Real Estate Stocks

Why Negative:
The real estate sector did not receive major tax relief or direct incentives.

Impact on Stocks:

• Investor disappointment
• Weak short-term sentiment
• Slower price momentum

3. Banking and Financial Stocks (Short-Term Pressure)

Why Negative:
Higher government borrowing and market volatility may affect treasury gains and bond yields.

Impact on Stocks:

• Short-term pressure on valuations
• Interest rate uncertainty
• Mixed investor sentiment

4. Derivative-Focused Market Businesses

Companies dependent on futures and options trading volumes may face reduced activity due to higher taxes.

⚖️ Mixed Impact Sectors

Some sectors show both positive and negative influences.

IT Sector

• Positive from digital infrastructure growth
• Neutral due to lack of direct incentives

Automobile Sector

• Positive from manufacturing push
• Neutral due to no major tax cuts

Key Takeaways for Investors

Positive Themes from Budget 2026

✔ Infrastructure growth
✔ Manufacturing expansion
✔ Semiconductor and electronics push
✔ Healthcare infrastructure
✔ Defence production

Negative Themes

✖ Higher trading taxes
✖ Realty sector disappointment
✖ Short-term pressure on financial stocks

Investment Strategy After Budget 2026

Short-Term:
Expect volatility in brokerage, financial, and real estate stocks.

Long-Term:
Infrastructure, capital goods, cement, manufacturing, electronics, and defence sectors look strong for long-term growth.

Conclusion

The Union Budget 2026–27 is growth-oriented and focuses on building long-term economic strength. While some sectors reacted negatively in the short term, the overall direction favors infrastructure, manufacturing, healthcare, and strategic industries. Investors should focus on fundamentally strong companies aligned with government growth priorities.