Stock market: Economic Survey sets tone for Budget expectations, sectors to watch on Feb 1

Economic Survey 2026, released yesterday, assumed significance not only for assessing growth assumptions but also for gauging the state of the Indian economy amid shifts in the global order. Market participants said the survey highlighted growing risks and vulnerabilities, and pointed to the increasing importance of certain sectors in the Budget 2026. Traditional sectors such as pharmaceuticals, textiles, infrastructure and energy have been identified important, while defence, shipbuilding, electronics and critical minerals are seen as key strategic areas, analysts noted. Overall, the best-case scenario for the world in 2026, the survey noted, is ‘business as in 2025’. Stock investors can take cues.

"For India, FY27 is expected to be a year of adjustment, as firms and households adapt to GST rationalisation, faster progress on deregulation, and simplification of compliance requirements across sectors amid a globally challenging environment," said MOFSL.

Nirmal Bang Institutional Equities said the priorities in the Budget are likely to include strengthening domestic manufacturing, supporting exports, reducing the cost of capital and ensuring currency stability.

Namrata Mittal, CFA, Chief Economist at SBI Mutual Fund said she sees a possibility of a double‑digit increase in central capex, no new welfare freebies and some plausible measures to attract foreign capital a deeper manufacturing thrust. This, she said, would be seen as critical to lower cost of funds in India and strengthen rupee.

Besides, Mittal sees infrastructure‑led competitiveness strategy, a refreshed disinvestment and asset‑monetisation architecture, and enhanced support for strategic technologies and semiconductor capacity.

The survey highlighted sectors with critical vulnerabilities and high strategic urgency, such as defense-critical systems, core infrastructure inputs, energy security components, public health essentials, and foundational industrial technologies. It talked about economically feasible capabilities with strategic payoffs, such as goods where domestic production is economically feasible at reasonable cost, but imports persist due to various reasons. They included cranes, industrial machinery, EV drivetrains, and medical devices (non-critical) are among others.

Besides, it talked about low strategic urgency or high-cost substitution, such as TBMS, rail signaling, defense electronics, and electrolyzers.

"The upcoming budget will be realistic but ambitious in outlook. The focus would rightly be on “Swadeshi as it is both inevitable and necessary in the current landscape," MOFSL said.

Against this backdrop, MOFSL highlighted emerging themes and sectors that the survey is focusing on: Traditional core sectors: Pharmaceuticals, textiles, infrastructure, and energy strategic emerging sectors: Defense, shipbuilding, electronics and critical minerals.

Mittal said the survey’s criticism of state‑level cash transfers and welfare expansion reaffirms that fiscal sustainability requires continued prudence. "This likely translates into: avoidance of large consumption‑oriented giveaways at the Centre, conditional capex‑loan schemes to enforce discipline among states, and incentives for states to maintain lower revenue deficits," she said.