Dalal Street lost $360 billion in January, all eyes now on FM Sitharaman's Feb 1 speech

Dalal Street might be headed for its worst beginning in a decade and now all eyes are on what the government will announce in the upcoming Budget. With equities, the rupee and bonds all under strain, more and more investors are looking to the Union Budget 2026 for measures that could restore confidence and boost economic growth.

So far this year, Indian equity benchmarks have tumbled almost 4%, marking the NSE Nifty 50 Index’s worst start since 2016. Foreign investors continued to pare their exposure to local shares, while a heavy supply of bonds has weighed on debt markets. The sell-off has wiped out roughly $360 billion in market value this month, according to the data compiled by Bloomberg.




Now, the focus is on whether the government opts to raise defence spending and push ahead with stake sales in state-run enterprises to strengthen revenues, following income-tax cuts and lower consumption levies announced last year. Market participants see these moves as potential levers to lift sentiment across asset classes.

“The budget is likely to aim at stimulating the economy, which means additional measures to boost consumption and push domestic manufacturing,” Abhishek Banerjee, chief executive of LotusDew Wealth and Investment Advisors told Bloomberg.

Here is what sector stocks you should watch on February 1:

Government companies

This Budget, the focus will be on what measures the government will undertake for faster sale of shares from the upcoming financial year. The government needs to cut down it shareholding in Life Insurance Corp, the country’s largest insurer, to meet public float norms and has already obtained regulatory relief. With timelines tightening, a stake sale could be weighed in the fiscal year ending March 2027. IDBI Bank Ltd. is also set to remain in focus as progress is made on its long-awaited privatisation.

Defence sector

Defence has emerged as a another important segment amid the broader market weakness. India’s drive to expand domestic defence manufacturing has lifted select stocks, with the NSE defence index more than tripling over the past three years. The sector budget is close to 7 trillion rupees for fiscal 2026 and is projected to grow between 10% and 15%, according to Nirmal Bang Institutional Equities. Shares of Bharat Electronics Ltd. have climbed more than fourfold during this period, while Solar Industries India Ltd. and MTAR Technologies Ltd. are also being closely tracked by investors.

Infra sector - Roads and railways

Infrastructure spending, particularly on roads and railways, is expected to remain a priority in the budget. Both segments have already absorbed a large share of last year’s allocations and are widely anticipated to receive higher funding. Continued investment in modernising the railway network, with an emphasis on safety, speed and passenger comfort, is likely to feature prominently. Larsen & Toubro Ltd. and state-owned BEML Ltd. are among the companies seen as key beneficiaries.

Brokerages

Capital market-linked stocks are another area under watch. Shares of brokerages, exchanges and market service providers fell last year amid overall market weakness. Therefore, any changes to capital gains taxation in the budget could have immediate implications for trading activity, Citigroup Inc., according to strategists.

(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)