Union Budget 2026–27 Puts Portfolio Construction at the Forefront as Markets Navigate Near-Term Volatility: PL Wealth Management
According to PL Wealth, the wealth management arm of PL Capital (Prabhudas Lilladher), Budget 2026–27 reflects a deliberate and measured policy stance—one that prioritises durability of growth, fiscal prudence and execution certainty over short-term market appeasement. While elevated borrowing and liquidity adjustments may create intermittent volatility across asset classes, these should be viewed as transitional effects rather than signals of macro stress.
For long-term investors, the Budget reinforces confidence in India’s medium-term growth trajectory, underpinned by sustained public investment, manufacturing depth, services expansion and institutional continuity. Periods of market volatility—particularly in fixed income yields and rate-sensitive equities—offer opportunities to recalibrate portfolios toward high-quality assets and policy-aligned themes.
Inderbir Singh Jolly, CEO, PL Wealth Management said, “In this environment, a disciplined approach to asset allocation, prudent duration management and selective exposure to structural growth sectors remains the most effective strategy to compound wealth while navigating near-term uncertainty.”
The Union Budget 2026–27 reinforces the Government’s commitment to execution-led growth while maintaining fiscal credibility. The policy stance prioritises durable capital formation, domestic manufacturing and services competitiveness, even as fiscal consolidation proceeds at a calibrated pace. With capital expenditure budgeted at ?12.2 lakh crore (+11.5% YoY) and the fiscal deficit set at 4.3% of GDP, the Budget balances growth support with macro stability.
For markets, the near-term response is likely to be shaped by higher gross sovereign borrowing, the re-introduction of net T-bill issuance and modest increases in market transaction costs. These factors may lead to volatility in bond yields and select equity segments. However, the medium-term investment case—anchored in public capex, manufacturing incentives and policy continuity—remains intact. Investors should differentiate between short-term market adjustments and the longer-term structural opportunity being reinforced by the Budget
Asset Class View
Equities:
According to PL Wealth, in the near term, markets may see sectoral rotation, particularly in valuation-sensitive and flow-driven segments, as investors respond to domestic policy priorities and improved clarity from the India–US trade deal. Over the medium term, the outlook remains constructive, supported by momentum in infrastructure, capital goods, defence, logistics, manufacturing, and select export-oriented sectors such as engineering goods, textiles, and gems & jewellery. Investment focus should remain on companies with strong balance sheets, proven execution, and high earnings visibility.
Fixed Income: In the near term, bond markets may face yield pressures driven by elevated supply and the overhang of global interest rate uncertainty. Over the medium term, higher yields enhance forward return potential, particularly for high-quality bonds. Accordingly, portfolio strategy should focus on maintaining a short-to-medium duration bias, adopting laddered structures, and pursuing selective accrual opportunities to balance risk and returns.
Alternatives: PL Wealth believes that Infrastructure assets, including InvITs and REITs, along with private credit and select private equity themes, stand to benefit from policy continuity, expanding project pipelines, and increasingly predictable cash flows. These alternatives can play a meaningful role in portfolio diversification, particularly amid heightened equity market volatility and ongoing bond market repricing.
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