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Among the worst losers were Ircon International, Mishra Dhatu Nigam, Rail Vikas Nigam (RVNL), Indian Rail Finance Corporation (IRFC) and Gujarat Gas which corrected between 9.3% and 6%.
Capex intensive sectors like defense, railway and power saw their stocks go down as the budget speech lacked big bang announcements.
On the last 7 budget days (since 2020) including this one, BSE PSU index has given negative returns on three occasions. Two other times when the 63-stock index fell by 0.08% and 0.50% were 2020 and 2023, respectively. The positive returns were recorded in 2021 (3.02%), 2022 (1.11%), February 1, 2024 (2.84%) and July 23, 2024 (0.67%).
In 2024 there were two budgets - interim budget of February and July full budget.
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For FY26, Finance Minister Nirmala Sitharaman who presented her 8th consecutive budget, allocated Rs 6.81 lakh crore towards defence expenditure, a 9.5% jump over FY25 budget of Rs 6.21 lakh crore. In this Rs 1.8 lakh crore has been set aside for modernisation which is a modest increase from Rs 1.7 lakh crore in FY25.
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As a result major defense PSUs like Hindustan Aeronautics (HAL), Bharat Dynamics (BDL), Bharat Electronics (BEL), Bharat Heavy Electricals and others fell by up to 4%.
Likewise, railway stocks fell sharply after the government left the railways capex of Rs 2.52 lakh crore for FY26 similar to FY25 revised estimates. There is a marginal increase in capex towards laying of new lines, signaling, track renewals, payment of capital components for leased assets, local trains in urban areas, etc is proposed, a budget note by SBI Securities said.
Shipping and power stocks were also casualties of the beaten down sentiments on the Street. Stocks like Mazagon Dock, Garden Reach Shipbuilders, Cochin Shipyard declined by nearly 5% notwithstanding FM's announcement of a major revamp to the shipping sector.
The government announced a comprehensive revamp of its financial assistance policy, anchored by the creation of a Maritime Development Fund with a substantial corpus of Rs 25,000 crore. Under this initiative, the government will contribute 49% to the fund, aiming to enhance the competitiveness and capacity of India’s shipbuilding sector.
Power stocks like Power Grid, NTPC and NHPC met a similar fate along with energy and metal stocks like Mishra Dhatu Nigam, National Aluminium Company (NALCO), Oil and Natural Gas Commission (ONGC), Indian Oil Corporation (IOC).
"Looks like both for railways and roads, the allocations are absolutely flat. The defence allocations are marginally higher and at the same time, the subsidies that the government allocates, that number has also been kept flattish at Rs 4.3 trillion. So, budget is always a balancing exercise. So, if you have to provide some leeway to one segment of the population, then the ability of the finance minister to sort of balance that budget gets constrained on the other side and at the same time, you still have to stick to the 4.5% glide path that they had articulated in the last budget," Gautam Duggad, Motilal Oswal said, reacting to the budget announcements.
Duggad said that the capex will remain in a slightly moderate lane in the near term and people who have been underweight on staples and discretionaries could rejig their portfolios.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
