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Below Reaction on Budget By Vinod Nair, Head of Research, Geojit Investments Limited

"The 2026 Budget aims to balance growth and stability by leveraging the available strength of its consolidated financials, following the extensive reforms over the past one to three years. These measures may result to a modest near-term total receipt, which had led to low stock market expectations for further tax and non-tax reforms. Despite external challenges, the budget is structured around a nominal GDP growth target of 10% higher than in FY26. This optimistic outlook is driven by an anticipated rise in domestic demand, supported by the long-term multiplier effect of the implemented reforms. However, this forecast must navigate external challenges such as tariffs and geopolitical tensions, amidst a low inflationary environment.

The budget supports sectors affected by global trade tariffs and focuses on emerging areas of development, including data centers, GCC, semiconductors, biopharma, rare earth elements, and manufacturing. Additionally, it extends support to traditional sectors like textiles, aquaculture, and MSMEs, which have been impacted by global protectionist trade policies. Despite these measures, the market's reaction has been negative, primarily due to low expectations, limited outlays and the negative bias created by the increased Securities Transaction Tax (STT) for futures, triggering a knee-jerk response."

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