Investors are optimistic about India’s fiscal roadmap as the 2026 Union Budget gears up to prioritize capital-intensive sectors amid tight fiscal controls. A Thursday smallcase report, based on insights from more than 50 fund managers, highlights defense as the clear frontrunner for boosted allocations.

Around 40% of surveyed professionals point to defense, citing imperatives like indigenizing production, upgrading military capabilities, export ambitions, and steady government outlays. Infrastructure follows closely at 29%, with expectations of hefty spends on highways, rail networks, and urban development to drive enduring growth.

Bullish on equities, 82% forecast Nifty 50 above 25,000 by FY27 end, while 43% narrow it to 25,000-27,500. Inflation is a non-issue for 85%, projecting containment under 5%. Manufacturing garners 18% support via PLI continuity, with consumption and agri at 7% apiece for selective boosts.

Short-term market jitters are anticipated by 80% due to announcements and external shocks, yet recovery is seen as imminent. Corporate tax cuts seem off the table, but personal tax tweaks could ease salaried burdens.

The strategy underscores targeted demand stimulation in cities and villages, eschewing extravagant spending to preserve fiscal prudence. This balanced approach reinforces investor confidence in India’s growth trajectory.