As India approaches the Union Budget for FY26-27, investors are preparing for heightened market volatility that historically accompanies this significant policy event. The Union Budget remains one of the most influential events for Indian equities, often reshaping sectoral leadership and driving market trends in both short and medium terms. This year's Budget is expected to maintain focus on capital expenditure, manufacturing-led growth, and macroeconomic stability amid global uncertainties around growth, geopolitics, and interest rates.

Expert-Recommended Portfolio Allocation Strategies

Market experts emphasize diversification and balance as key themes for Budget 2026 positioning. Rather than taking aggressive sectoral bets, analysts recommend maintaining exposure to stable large-cap stocks while complementing equity positions with defensive and alternative assets.

Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities, advocates for balanced portfolio construction ahead of the Budget. Sheth recommends an ideal allocation including 50% in large-cap equities, 30% in gold, 10% in silver, and 10% in bonds, designed to offer stability amid policy-driven volatility.

Technical Analysis Perspective

From a technical standpoint, large-cap stocks continue providing relative strength and trend stability during uncertain phases. Aakash Shah, Technical Research Analyst at Choice Equity Broking, suggests portfolios should remain core-heavy on large caps while selectively adding mid-caps showing strong technical setups.

Shah's recommended structure includes:

• 50-55% exposure to large caps for stability
• 25-30% allocation to select mid-caps with strong technical indicators
• Remaining allocation in cash or defensive positions to capitalize on post-Budget corrections

Long-term Strategic Considerations

While short-term Budget volatility is inevitable, experts stress the importance of maintaining long-term asset allocation discipline. Vikas Gupta, CEO and Chief Investment Strategist at OmniScience Capital, emphasizes diversified exposure in the current environment.

Gupta describes this framework as offering resilience for the year ahead while maintaining exposure to structural growth themes with adequate downside protection.

Market Positioning Recommendations

V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, emphasizes prioritizing equity exposure with a stability tilt. His approach includes maintaining higher weightage to equities, moderate exposure to gold, lower allocation to fixed income, and keeping large caps as core holdings going into the Budget.

Experts agree that staying diversified, avoiding knee-jerk reactions, and focusing on long-term fundamentals can help investors navigate near-term volatility while remaining positioned for opportunities emerging from policy announcements. The consensus centers on balanced approaches that provide both growth potential and downside protection during this critical policy period.

The PHD Chamber of Commerce and Industry (PHDCCI) has unveiled an ambitious proposal for Budget 2026-27, calling for a substantial increase in government capital expenditure to counter global growth uncertainty and stimulate economic momentum. The recommendation comes at a time when private investment has moved off its peak, necessitating state intervention as the primary growth catalyst.

Proposed Capital Expenditure Framework

At the core of PHDCCI's proposal lies a significant scaling up of public capital spending, targeting an additional ₹5 lakh crore over the next five years. This represents approximately 2.6% of GDP 2024-25. The investment strategy focuses on productive assets across multiple sectors including infrastructure, logistics, green energy, housing, manufacturing, digital systems, and human capital development.

Economic Impact and Growth Multipliers

PHDCCI's analysis indicates that public investment delivers some of the highest fiscal multipliers in the Indian context. The organization emphasizes that empirical evidence shows capital expenditure multipliers peak within the first 2-3 years, particularly when infrastructure gaps exist. The strategy aims to raise near-term demand while simultaneously expanding the economy's productive capacity.

According to PHDCCI estimates, the incremental capital push could lift GDP by roughly 0.7-1.1 percentage points over the medium term once lagged effects are accounted for. The immediate beneficiaries include construction activity, materials sector, transport services, with long-term benefits flowing to businesses through reduced operational costs from improved infrastructure.

Employment Generation Potential

The proposal places significant emphasis on job creation, addressing current concerns about job quality and participation rates. Infrastructure and housing sectors, being among the most labour-intensive, are expected to absorb large numbers of low- and semi-skilled workers.

Sustainability Integration

A distinctive aspect of the 2026-27 proposal involves integrating growth policy with climate and sustainability objectives. The framework positions Green, ESG, and Sustainable Development Bonds as financing instruments for renewable energy projects, green hydrogen initiatives, and energy transition programs aligned with India's target of 500 GW of non-fossil capacity by 2030.

Key sustainability programs highlighted include the National Green Hydrogen Mission and solar rooftop expansion, demonstrating an attempt to combine fiscal expansion with global decarbonization goals. PHDCCI notes that the strategy's effectiveness will depend on timely project rollout and coordination with states, while acknowledging risks from global financial conditions and commodity price volatility.

Strategic Rationale

PHDCCI positions this proposal as prioritizing capital formation over populism, reinforcing public investment as the bridge between current economic uncertainties and future growth potential. The organization argues that improved logistics, reliable power, digital connectivity, and urban infrastructure will reduce business risks and enhance returns, ultimately attracting higher corporate investment and reinforcing India's attractiveness as a foreign direct investment destination.