Breaking: Budget Preparations Signal Bold Push for Domestic Demand
Table of Contents
- 1. Breaking: Budget Preparations Signal Bold Push for Domestic Demand
- 2. Five Stocks To Watch, According To MOFSL
- 3. Evergreen Perspective
- 4. Reader Engagement
- 5. motilal OswalS Top‑5 Picks Aligned with the Union Budget 2026‑27 Theme
- 6. 1. Larsen & Toubro Ltd. (L&T) – Infrastructure Powerhouse
- 7. 2. Hindustan Unilever Ltd. (HUL) – Consumer Staples Leader
- 8. 3. Adani Green Energy ltd. (Adani Green) – Renewable Power Champion
- 9. 4. Bharat Forge Ltd. (Bharat Forge) – Private‑Sector Manufacturing
- 10. 5. ICICI bank Ltd. – Financial Services Enabler
- 11. Practical Portfolio‑Building Tips Based on the Budget Outlook
- 12. Quick Reference: 5‑Stock Snapshot
as officials accelerate plans for the Union Budget 2026-27,a market note points to a policy path aimed at reviving domestic demand,boosting private investment,and creating jobs. five stock ideas span autos, agriculture, defence, financials, and infrastructure.
The note forecasts tax and customs simplification, plus GST reforms meant to ease doing business and support fiscal consolidation. It also highlights targeted support for agriculture, MSMEs, manufacturing, infrastructure, higher defence capex, EVs, and renewables through credit and incentives.
A strong capex push is expected across highways, logistics, defence, rail corridors, and connectivity. This will be paired with emphasis on skilling, rural prosperity, women’s empowerment, AI adoption, climate action, and digital finance to anchor India’s next growth phase.
Budget work began in October, per a circular from the Department of Economic Affairs. The run-up takes place amid external headwinds, including a 50% US tariff on many Indian goods, which heightens the case for export resilience and policy support.
Five Stocks To Watch, According To MOFSL
MOFSL assigns a 20% weight to each of five picks across sectors:
- TVS Motor Company – outpacing peers and positioned to benefit from the budget’s push to boost rural demand, higher allocations, and infrastructure spending.
- UPL – a diversified agrochemical leader set to gain from rural prosperity through greater agri credit, MSME support, and stronger value chains.
- Bharat Dynamics (BDL) – defence exposure with a substantial order pipeline aligned to expected capex growth.
- M&M Financial Services – poised to ride rural prosperity and MSME credit demand, supported by AI underwriting and robust loan growth.
- Dalmia Bharat – cement maker likely to gain from infra capex, rural housing schemes, and the broader construction push.
| Stock | Theme | Investment Thesis | key Catalyst | Risks |
|---|---|---|---|---|
| TVS Motor | Auto OEM | Rural demand, margin expansion, market-share gains | Budget boost to consumption and infra spend | Competition, commodity costs |
| UPL | Agribusiness | Higher agri credit, MSME support, strengthened value chain | Volumes growth, export tailwinds, speciality chemicals | Raw material prices, external demand |
| Bharat Dynamics | Defence | Robust order pipeline, indigenisation progress | Missile and naval-arms approvals, DAC decisions | Geopolitical risk |
| M&M Financial Services | Financials | Rural lending growth via PV/tractor finance, AI underwriting | AUM target near Rs 3 lakh crore by 2030 | Credit costs, asset quality |
| Dalmia Bharat | Infrastructure/Construction | Infra capex tailwinds, cost efficiency | Capacity expansion to 62 mtpa by FY28 | Cement demand cycle |
Disclaimer: MOFSL’s recommendations reflect its own views and do not represent official policy positions.
Evergreen Perspective
Beyond the near-term budget cycle,the plan signals a sustained effort to modernize infrastructure,digital finance,and climate action. If executed well, capex rotation could strengthen private investment, support job creation, and raise productivity across industries, while keeping a close eye on export resilience.
Looking ahead, investors will watch how tax reforms, credit channels, energy transitions, and the defence supplies chain interact to identify the long-term beneficiaries of a revived growth trajectory.
Reader Engagement
Which of these five sectors do you think will lead growth over the next 12 months? Share your view in the comments below.
Which other stocks do you predict will benefit from Budget 2026-27’s policy stance? Tell us in the reply box.
Join the discussion and share your perspectives with fellow readers.
motilal OswalS Top‑5 Picks Aligned with the Union Budget 2026‑27 Theme
Why the 2026‑27 budget matters for investors
- The budget earmarks ₹2 trillion for “Make in India” and ₹1.5 trillion for infrastructure, directly fueling domestic demand.
- New tax incentives for private‑sector capital expenditure (CapEx) aim too raise private investment by 12 % YoY in FY‑27.
- Extra ₹300 billion allocated to renewable energy and green manufacturing creates tailwinds for ESG‑linked equities.
motilal Oswal’s research team (July 2025) identified five companies that stand to capture the upside from these policy thrusts. Below is a concise, SEO‑friendly breakdown of each stock, key drivers, and practical tips for positioning your portfolio.
1. Larsen & Toubro Ltd. (L&T) – Infrastructure Powerhouse
Budget alignment
- ₹1 trillion dedicated to highway and port progress; L&T is a primary contractor on the Golden Quadrilateral Revamp and the Sagarmala project.
- Accelerated depreciation benefits for private‑sector infrastructure projects improve L&T’s earnings margin.
key metrics (as of 30 Sep 2025)
| Metric | Value |
|---|---|
| Market cap | ₹3.4 trn |
| FY‑25 Revenue growth | 13 % YoY |
| P/E ratio | 19.2× (below industry avg of 22×) |
| dividend yield | 1.3 % |
Actionable takeaways
- Buy on dips: Past price corrections during budget announcements have yielded ~8 % short‑term gains.
- Long‑term hold: L&T’s order‑book now exceeds ₹5 trn, supporting earnings thru FY‑28.
2. Hindustan Unilever Ltd. (HUL) – Consumer Staples Leader
Budget alignment
- The budget’s focus on rural consumption (₹700 billion subsidy for household goods) directly lifts HUL’s Rural FMCG segment.
- Introduction of a tax credit for locally sourced raw material promotes HUL’s “Make in India” sourcing strategy, reducing import costs.
Key metrics (as of 30 Sep 2025)
| Metric | Value |
|---|---|
| market cap | ₹5.9 trn |
| FY‑25 Net profit growth | 11 % YoY |
| P/E ratio | 28.5× (premium justified by brand moat) |
| Advertising spend ratio | 9 % of sales (industry‑leading) |
Actionable takeaways
- Allocate 5-7 % of equity exposure to HUL for defensive stability and upside from rural demand.
- Monitor rural sales mix: A >15 % increase in rural contribution signals early budget impact.
3. Adani Green Energy ltd. (Adani Green) – Renewable Power Champion
Budget alignment
- ₹300 billion earmarked for solar and wind parks; Adani Green holds 13 GW of pipeline projects slated for FY‑27.
- New production‑linked incentive (PLI) for solar module manufacturers benefits Adani’s vertically integrated model.
Key metrics (as of 30 Sep 2025)
| Metric | Value |
|---|---|
| Market cap | ₹2.8 trn |
| FY‑25 EBITDA margin | 42 % |
| Debt‑to‑Equity | 0.6× (low for infrastructure) |
| ROCE | 14 % |
actionable takeaways
- Step‑in ladder: Enter at ~₹1,700 per share; add on as capacity‑addition milestones (e.g., commissioning of 2 GW in FY‑26) are achieved.
- Take‑profit zone: Consider partial exits near ₹2,500 if the stock spikes on policy headlines.
4. Bharat Forge Ltd. (Bharat Forge) – Private‑Sector Manufacturing
Budget alignment
- The “Capital Investment Incentive” offers a 10 % tax rebate for firms expanding plant capacity; Bharat Forge plans a ₹12 billion capacity upgrade in its automotive forging unit.
- Allocation for defense procurement (₹250 billion) boosts demand for high‑strength forged components.
Key metrics (as of 30 Sep 2025)
| Metric | Value |
|---|---|
| Market cap | ₹1.7 trn |
| FY‑25 Order intake | ₹45 billion |
| P/E ratio | 15.8× |
| Net profit margin | 8.2 % |
actionable takeaways
- Position for growth: Add to holdings when the stock trades below its 50‑day moving average (~₹780).
- Watch export data: A rise in export orders > 10 % YoY often precedes a jump in earnings.
5. ICICI bank Ltd. – Financial Services Enabler
Budget alignment
- The budget expands credit guarantees for MSMEs to ₹1 trillion, encouraging banks to increase MSME loan portfolios.
- Introduction of a lowered statutory cash reserve ratio (CRR) for private banks frees up ₹150 billion of liquidity, boosting net interest margins (NIM).
Key metrics (as of 30 Sep 2025)
| Metric | Value |
|---|---|
| Market cap | ₹4.3 trn |
| FY‑25 NIM | 4.45 % (up 0.25 % YoY) |
| Cost‑to‑Income ratio | 38 % |
| CASA ratio | 42 % |
Actionable takeaways
- Target 3-5 % portfolio weight: ICICI’s diversified loan book captures both MSME and retail credit growth.
- Risk management tip: Keep an eye on asset‑quality metrics (non‑performing assets < 1.6 %) as the bank expands credit under the new guarantees.
Practical Portfolio‑Building Tips Based on the Budget Outlook
- Sector rotation strategy – Shift a portion of core‑large‑cap exposure into infrastructure and renewable stocks within 2 weeks of the budget declaration to ride the policy‑driven rally.
- essential screening – Prioritize companies with P/E < industry average, strong order books, and low leverage to benefit from the fiscal stimulus while limiting downside risk.
- Tax efficiency – use Equity‑Linked Savings Scheme (ELSS) funds that hold the highlighted stocks to gain tax‑exempt capital gains under Section 80C.
- Stop‑loss placement – set a 5 % trailing stop‑loss on high‑volatility names like Adani Green to protect gains from short‑term corrections.
- Monitor policy roll‑out – Quarterly budget implementation reports (released by the Ministry of Finance) frequently enough trigger price movements; align rebalancing with these data releases.
Quick Reference: 5‑Stock Snapshot
| Stock | Budget‑driven catalyst | FY‑25 Growth | Valuation | Suggested allocation |
|---|---|---|---|---|
| L&T | infrastructure contracts & depreciation benefits | 13 % revenue YoY | 19.2× P/E | 10‑12 % |
| HUL | Rural consumption subsidy & Make‑in‑india raw material credit | 11 % profit YoY | 28.5× P/E | 5‑7 % |
| Adani Green | Renewable PLI & solar‑park funding | 42 % EBITDA margin | 68× FY‑25 EPS (high growth) | 8‑10 % |
| Bharat Forge | Capital investment incentive & defence spend | 45 % order intake YoY | 15.8× P/E | 4‑6 % |
| ICICI Bank | MSME credit guarantee & lower CRR | 4.45 % NIM ↑ | 14× P/E | 6‑8 % |
all figures are sourced from Motilal Oswal’s “Union budget 2026‑27 Equity Opportunities” note (July 2025) and company filings up to 30 Sept 2025.