Budget 2026: BEL, L&T, M&M on radar; defence push may continue, says Ashika Credit's Chirag Jain

As markets brace for Budget 2026 amid recent volatility, Chirag Jain, CEO, Ashika Credit Capital, believes policy continuity, disciplined fiscal management and sustained capital expenditure (capex) will be the key themes to watch. In an emailed interaction with Business Today, Jain shared his expectations on taxes, divestment, capex, defence spending and market direction.

On the possibility of changes to equity taxation, Jain said major tweaks to short-term capital gains (STCG), long-term capital gains (LTCG) or securities transaction tax (STT) appear unlikely. "With strong retail participation and capital markets becoming a key savings avenue, the government probably won't risk unsettling sentiment. If there are any tweaks, they're more likely to be minor clarifications rather than real changes," he said.

FULL COVERAGE:  Union Budget 2026

Regarding divestment, Jain expects the government to set a realistic target for FY27 in the range of Rs 50,000–75,000 crore. According to him, the focus is likely to remain on small stake sales through CPSE ETFs and follow-on offerings instead of big-ticket strategic divestments. He added that names such as IDBI Bank and select listed CPSEs could continue to remain in focus.

On the broader investment theme, Jain said capex would clearly remain the backbone of the Budget. However, he also expects some incremental support for consumption, particularly in rural areas. "For investors, a balanced approach makes sense: capex as the core theme, with selective exposure to consumption plays linked to improving rural demand," he said.

On fiscal consolidation, Jain expects the government to guide towards a fiscal deficit of around 4.4–4.5 per cent of GDP for FY27. He noted that strong tax collections, improved GST compliance and asset monetisation should help the government stay on its fiscal consolidation path without compromising growth, despite recent spending measures.

Commenting on the likelihood of a post-Budget rally, Jain said a sharp, broad-based move appears unlikely. "But once the Budget-related uncertainty fades, markets could move up in a more selective, fundamentals-driven way. Policy consistency and fiscal discipline will matter more than big headline announcements," he said.

Defence, according to Jain, should continue to be a priority area in the Budget. He expects a 10–12 per cent increase in defence allocation, largely directed towards capex. "Areas like defence electronics, shipbuilding, aerospace and indigenous manufacturing should remain key beneficiaries," he said.

On capex targets, Jain said allocation of around Rs 11–12 lakh crore would be a strong positive for market sentiment. Growth of 15 per cent or more, he added, would clearly signal confidence in India's medium-term growth story.

Highlighting key market drivers, Jain outlined three make-or-break factors: effective execution of capex, fiscal discipline to keep bond yields and macro stability in check, and policy continuity. "Markets value predictability far more than populist surprises," he said.

Among sectors that remain under-appreciated, Jain pointed to railway-linked companies, power transmission, defence electronics, renewable infrastructure and affordable housing, citing strong policy support and long-term visibility.

Looking ahead, Jain projected that by December 2026, Sensex could be around 90,000 and Nifty near 27,000, assuming stable macro conditions and steady earnings growth. Stocks aligned with Budget themes, he said, include Larsen & Toubro (L&T) for capex and infrastructure, Bharat Electronics Ltd (BEL) for defence indigenisation, and Mahindra & Mahindra Ltd (M&M) for rural demand and mobility.