Budget 2026: Equity markets, capital expenditure, and foreign flows – Insights from Sundararaman Ramamurthy

In the wake of Union Budget 2026, market participants are analyzing the implications of key announcements, from the hike in securities transaction tax (STT) to capital expenditure projections. Sundararaman Ramamurthy, MD & CEO, BSE shared his perspectives on ET Now, offering a balanced view of opportunities and market dynamics.

On the likely impact of budget measures on equity investments, Ramamurthy said, “…the impact of this move, in my opinion, is going to encourage people to consider investments into equities. This will therefore result in longer-term equity investments, and some amount of arbitrage funds which are in mutual funds may go towards bank deposits or investments into equities, that is my view.”

When asked about potential changes in derivatives volumes and exchange revenues, he explained, “Markets are very dynamic and with a growing economy like India, the number of investors, number of participants, number of foreign players—all are on the increase. So, one event, one declaration, one rule in a budget having an impact on a growing economy is very difficult to predict."

On foreign flows, Ramamurthy noted, “I would not know whose expectations were what, but multiple people have multiple expectations. Foreign flow is a function of multiple factors because people who have the capability to go to any market are also coming into India. So, when we take that into account—geopolitical factors, global wars, tariffs, alternate investment avenues like say gold—all this matters when we talk of foreign flows. So, given that, just making one budget statement responsible for the entire foreign flow may not be fair from our side. Having said that, the government has been repeatedly establishing that it will not leave any stone unturned with regard to protecting Atmanirbharta of Bharat.

"You take any sector which got impacted by tariff, the government has tried to do whatever best it can. Government is putting efforts to make India strong in manufacturing, services, infrastructure, encouraging debt instruments, encouraging in a big way SMEs to make more and more good things out of them. So, when so much of effort is… and infrastructure in terms of InvITs and others, rare earths, pharma, so clearly the effort is to make Bharat strong. If Bharat is strong, naturally more foreign funds could be expected to come in, and also the effort on funds will help in the flow of foreign currency into India,” he added.

Reflecting on the budget’s overall strengths and potential misses, he added, “See, the hits I have totally clearly covered. I have no capability to talk of any misses because we people, we are simple households; to manage a budget of a house, we find it so difficult. We being salaried employees, to manage the entire budget of a country, after taking into account the views of multitudes of people with different aspirations and without losing sight of the ultimate goal, which is Viksit Bharat, and taking care of capital formation and fiscal discipline, the budget has done whatever it is intended to do.”

On the capital expenditure front, Ramamurthy commented, “12 trillion—that is 12 lakh crores—is what is, the 12.2 to be precise, is what the honourable finance minister has talked about. Let us understand, it is not a small number, and in a growing economy with so much of capability of private capital coming in, India witnessing the largest number of IPOs in terms of number and also in terms of money raised almost sometimes. So, it is not that there is any dearth of private capital coming in. With a lot of ease of business efforts, with a lot of reforms happening in multiple areas, and as a seeding 12 trillion of capital, I think the government is walking towards the right thing to ensure developed India.”

Finally, on the National Stock Exchange receiving its NOC for an IPO, he said, “My heartiest congratulations to NSE. It is a good thing that has happened. SEBI has delivered what it promised to deliver within the timeline they stipulated. We wish all the best to NSE and the team members there.”

With these insights, investors now have a clearer perspective on how budgetary policies might influence equities, capital formation, and foreign participation in India’s markets.