Budget 2026 Signals Demand Revival and Private Investment Thrust, Says Motilal Oswal
A robust emphasis on capital expenditures across key sectors such as highways, logistics, defense, rail freight corridors, and connectivity is set to characterize Budget 2026. As the Union Budget preparations for 2026-27 gain momentum, groundwork initiatives point to a deliberate policy focus on spurring domestic demand, reigniting private investment, and generating employment, according to a budget note by Motilal Oswal Financial Services (MOFSL). The brokerage has spotlighted five stocks spanning auto, agriculture, defense, financials, and infrastructure sectors, projected to yield substantial gains for investors.
Key Highlights from Budget 2026
– Policy Focus: The Budget is expected to simplify income tax, GST, and customs duties to enhance ease of doing business and support fiscal consolidation.
– Sector Support: Targeted initiatives for agriculture, MSMEs, manufacturing, infrastructure, defense spending, electric vehicles, and renewable energy through credit and incentives are anticipated.
– Economic Enhancements: Expect an emphasis on skill development, promoting rural prosperity, empowering women, adopting AI, implementing climate action, and advancing digital finance, all fundamental to India’s next economic phase.
The finance ministry commenced work on the Union Budget for 2026-27 on October 9, per a circular issued by the Department of Economic Affairs (DEA). This preparation comes amid challenges like a 50% US tariff on most Indian goods and other external pressures, heightening risks to India’s growth and job outlook. This backdrop has intensified calls for stronger support for the export sector.
5 Stocks to Buy According to MOFSL
The stocks identified by MOFSL that could potentially benefit from these developments include:
1. TVS Motor Company: Positioned to leverage the budget’s focus on boosting domestic consumption and rural demand through elevated allocations, income support, and infrastructure spending. Key drivers include improving rural sentiment, recovery in entry-level markets, and sustained demand for two-wheelers. The company’s market share gains, decreasing discounts, and margin expansion ensure strong earnings visibility, making it a top pick among OEMs.
2. UPL: As a leading player in the agrochemical sector, UPL stands to benefit from government efforts aimed at enhancing rural prosperity through increased agricultural credit and MSME support. The company’s strengths include growing volumes, favorable export conditions, and improved balance sheet strength. Its rising emphasis on specialty chemicals is expected to contribute significantly to growth in the latter half of FY26.
3. Bharat Dynamics (BDL): This defense-focused company boasts a robust order pipeline valued at Rs 50,000 crore over five years, with Rs 20,000 crore targeted within the next 2-3 years. This aligns with anticipated increases in defense capex and infrastructure investment. Recent approvals worth Rs 2.5 lakh crore in missile and naval arms systems place BDL in an advantageous position to achieve a FY31 turnover of Rs 100 billion through indigenization and cost-effective solutions.
4. M&M Financial Services: Benefitting from a focus on rural prosperity and MSME financing, M&M Financial is likely to see growth in loans for personal vehicles and tractors, driven by festive demand and GST cuts. The company aims for an impressive Rs 3 lakh crore in assets under management (AUM) by 2030, supported by advancements in AI underwriting, lower credit costs, and efficient operational management, ensuring significant earnings visibility.
5. Dalmia Bharat: With an infrastructure investment surge on the horizon, Dalmia Bharat is expected to capitalize on government projects related to housing and urban development, which will drive cement volume growth. As a low-cost cement producer with high blending ratios and sustainable energy practices, the company targets a capacity of 62 million tonnes per annum by FY28. Cost optimization strategies are set to enhance EBITDA margins amid industry consolidation.
Conclusion
As highlighted by Motilal Oswal, the impending Budget 2026 is pivotal for reviving domestic demand and stimulating private investments across critical sectors. The identified stocks, including BDL and UPL, not only promise growth but also align perfectly with the budgetary thrust aimed at bolstering India’s economic recovery. This landscape presents valuable opportunities for investors poised to take advantage of these trends.