smallcase Managers Pick Defence, Infra Top Union Budget ‘26 Bets
- Defence tops Budget allocation expectations, with ~40% of respondents flagging it as the biggest beneficiary of higher government spending
- Infrastructure ranks second at ~29%, reflecting confidence in continued public capex and long-term growth multipliers
- 82% of managers expect the Nifty 50 to close FY26–27 above 25,000, with nearly 50% projecting levels beyond 27,500
- ~80% of managers anticipate short-term market volatility around the Budget, though most expect fundamentals to reassert post-event
- FY27 inflation expected in the 4–5% range by ~57% of respondents, reinforcing confidence in macro stability and policy continuity
Bangalore/Mumbai, 22nd January 2026: The annual pre-budget survey of smallcase managers expects Union Budget 2026 to stay the course on fiscal prudence, reflecting confidence in India’s medium-term equity outlook with a strong preference for capex-led sectors and expectations of short-term market volatility. smallcase has conducted a survey of over 50 investment managers on the platform to understand their expectations from the Union Budget and its near-term implications for equity markets.
A decisive majority of respondents remain bullish on Indian equities over the medium term. Over 82% of smallcase managers expect the Nifty 50 to close FY26–27 above 25,000, with 43% projecting the index in the 25,000–27,500 range and nearly 39% seeing it between 27,500–30,000.
Inflation expectations remain well-anchored, with over 85% smallcase managers projecting FY27 inflation in the 4–5% or below 4% range, reinforcing confidence in macro stability and policy continuity.
Budget Sectoral Allocation Expectations:
Majority of the smallcase managers expect the upcoming Budget to maintain a strong focus on strategic and capex-heavy sectors.
- Defence emerged as the top beneficiary, with nearly 40% of respondents expecting higher allocations, driven by indigenization (Atmanirbhar Bharat), modernization, export potential and sustained government spending.
- Infrastructure followed closely at ~29%, reflecting continued confidence in public capex and long-term growth multipliers.
- Manufacturing accounted for ~18% of responses, supported by expectations of continued PLI-led policy support.
- Consumption and agriculture were cited by ~7% each, indicating expectations of targeted rather than broad-based support.
Budget-Related Volatility:
Market volatility around the Budget remains a key expectation. Nearly 80% of smallcase managers anticipate some degree of near-term volatility, largely driven by event-based positioning, policy surprises, and global cues. However, most believe this volatility will be short-lived, with markets reverting to fundamentals such as earnings growth and liquidity conditions post-Budget.
Taxation & Consumption Measures:
On taxation, the survey indicates expectations of incremental rather than sweeping relief. A majority of respondents see limited scope for large corporate tax cuts, while targeted relief or simplification for salaried individuals is viewed as more likely. The managers believe that corporate taxes are more likely to see stability rather than cuts, with continued focus on capex-linked incentives and compliance.
In terms of consumption, smallcase managers expect selective measures to support urban and rural demand, rather than broad fiscal stimulus, in line with the government’s fiscal discipline.
Speaking on campaign Vasanth Kamath, Founder & CEO, smallcase said, “smallcase’s annual pre-Budget survey from model portfolio managers offers a consolidated view of how they are interpreting government priorities, its implications for Indian markets and their portfolios. This year’s survey results highlight how they are positioning portfolios around long-term themes like defence, infrastructure, and manufacturing, while staying mindful of near-term volatility. On smallcase, investors can see these views translated into transparent, curated portfolios aligned to specific strategies and market outlooks. As managers anticipate volatility around the Budget but remain confident about the medium-term trajectory, smallcases continue to offer a structured way for investors to participate in these themes with clarity and discipline”.
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