Why Sunil Subramaniam sees Budget 2026 as a game-changer for the stock market

As India heads into Budget 2026 amid weak stock sentiment, market expert Sunil Subramaniam sees an opportunity for reform-driven optimism. Nifty 50’s 3% decline in January, largely due to FII outflows, has led to pre-Budget caution. Still, Subramaniam believes low expectations can turn the budget into a positive market trigger.“Three answers to that: reform, reform and more reform,” he said, noting that the economy has had “a very difficult year” marked by geopolitical tensions, high rates and FII withdrawal. Despite these challenges, fiscal management remains strong. “The very low expectation means that whatever the budget delivers will be viewed positively by the market. It can’t get worse than this… So I think it will be a good boost for the economy overall,” he said.

AI-focused reforms can draw back foreign capital, Subramaniam believes. “One of the reasons why FIIs pulled out… was because India is seen as a hedge against the AI ​​boom happening in the world… If the government implements a mega AI readiness plan in the budget… some amount of foreign capital might come back.”

According to him, reviving private investment is another important area that the 2026 Budget should focus on. “It is time for private capex to come to the party… private capex will be ready to go, but if the government can support this in two ways – one is to expand the PLI programme… The second would be to help finance this capex… public sector banks should take up the burden of long-term financing…” Subramaniam said.

Subramaniam believes consumption-related sectors will benefit from continued government support. “For me, the counter choice is real estate because that’s the one that hasn’t benefited from the GST at all yet… I see real estate… public sector banks… and consumer durables… this would be my cup of tea.” He added that broadening the VAT cuts or increasing the standard deduction could help shift the recovery from a K-shaped to a U-shaped trajectory.

As markets enter the budget with subdued expectations, even incremental reforms can act as a catalyst. “The shift in government thinking that we need to put money in the hands of people… to turn that K-shaped recovery into a U-shaped recovery….”