Indian markets likely to open higher ahead of Union Budget

Synopsis

Indian stock markets anticipate a positive opening today. Investors await the federal budget presentation for insights into government spending and support for export sectors. The budget aims to balance growth initiatives with fiscal discipline. Expectations are for measures to boost domestic manufacturing and rural demand. This could provide a much-needed boost to equities after a challenging start to the year.

Indian shares are set to open higher in a special trading session ahead ‍of the federal budget on Sunday as investors look for cues on support for growth from ⁠government capital spending and relief for export-oriented sectors hit by U.S. tariffs.

GIFT Nifty futures closed at 25,443 on Friday, indicating the NSE Nifty 50 will likely open above its previous close of 25,320.65.

Debt ‌and foreign ‌exchange markets are shut.

Finance Minister Nirmala Sitharaman will present the 2026-27 union budget at 11 a.m. IST.

The benchmark Nifty ‌50 has gained 7.8% since the last budget but has underperformed emerging market and Asian peers amid record foreign outflows and muted corporate earnings.

Policy measures since the last budget - GST cuts, interest rate reductions and liquidity easing - have improved the outlook for domestic earnings and consumption demand.

"We expect the budget to strike a balance between sustaining public capex momentum and adhering to the fiscal consolidation path," ‌said Pranav ‍Haridasan, managing director and chief executive at Axis Securities.

India's economy is ‍forecast to grow between 6.8% and 7.2% in fiscal 2027, ‌slightly slower than fiscal 2026's projected 7.4% growth, according to the economic survey released on Thursday.

India's fiscal year runs April through March.

Analysts expect targeted measures to support export-oriented sectors facing U.S. tariff pressures, while defence spending is likely to rise to bolster 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, U.S. trade concerns and about $4 billion in foreign ‍outflows, which also ⁠pushed the rupee to ⁠record lows.

Sectorally, higher capital outlays could lift industrials and infrastructure stocks, while steps to boost rural demand may benefit consumer companies.

An extension of production-linked incentive schemes could support electronics manufacturers, and insurers may gain if tax deductions on life insurance products are raised.

Wall Street equities fell on Friday and the dollar strengthened sharply after U.S. President Donald Trump announced former Federal Reserve governor Kevin Warsh, seen as an advocate of lower interest rates, as his choice to become the next chair of the central bank. [MKTS/GLOB]

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