Indian markets are likely to open higher than the Union Budget

Indian shares are likely to open higher on Sunday in a special trading session ahead of the federal budget, as investors look for evidence of support for growth from government investment and aid for export-oriented sectors hit by US tariffs. GIFT Nifty futures closed at 25,443 on Friday, indicating that the NSE Nifty 50 is likely to open above the previous close of 25,320.65.

The debt and foreign exchange markets are closed.Finance Minister Nirmala Sitharaman will present the Union Budget 2026-27 at 11 am IST.

The benchmark Nifty ‌50 has risen 7.8% since the last fiscal but has underperformed emerging markets and Asian peers amid record foreign outflows and subdued corporate earnings.

Policy measures since the last budget – VAT cuts, interest rate cuts and liquidity expansion – have improved the outlook for domestic profits and consumer demand.

“We expect the budget to strike a balance between maintaining public investment momentum and following the path of fiscal consolidation,” said Pranav Haridasan, managing director and CEO of Axis Securities. India’s economy is expected to grow between 6.8% and 7.2% in fiscal 2027, slightly slower than the projected 7.4% growth in fiscal 2026, the economic survey released on Thursday showed.

The Indian financial year runs from April to March.

Analysts expect targeted measures to support export-oriented sectors facing US tariff pressure, while defense spending is likely to rise to support domestic manufacturing.

A supportive Budget could provide a much-needed catalyst for equities after a subdued start to 2026. The Nifty and Sensex fell 3.1% and 3.5% in January, their worst monthly performance in 11 months, dragged by weak earnings, US trade concerns and about $4 billion in foreign outflows, which also pushed the rupee to a record low.

Sectorally, higher capital expenditure could lift stocks in the industrial and infrastructure sectors, while steps to boost rural demand could benefit consumer companies.

An expansion of production-linked incentives could support electronics manufacturers, and insurers could benefit from increasing tax deductions on life insurance products.

Wall Street stocks fell on Friday and the dollar strengthened sharply after US President Donald Trump announced former Federal Reserve Governor Kevin Warsh, seen as a proponent of lower interest rates, as his pick to become the next central bank chairman. [MKTS/GLOB]