Budget 2026 may offer incentives for the struggling export sector: Nuvama Group's Senior VP for Research

Budget 2026: Sandeep Raina, Senior Vice President - Research for Nuvama Group, expects some pause in fiscal consolidation in FY27, which will be favourable for growth and positive for the stock market. In an interview with Mint, Raina said he expects some incentives for the rural economy driven by low food inflation and rising gold and land prices, and some incentive schemes for the stressed-out export sector post US tariffs.

Edited excerpts:

What are your key expectations from the Budget 2026? What key reforms can accelerate growth amid US tariffs and global uncertainties?

Since the Government of India has already announced multiple initiatives, such as GST rationalisation and tax cuts in CY25, further direct incentives are likely to be negligible (if any).

To sustain a short-term consumption boost, the government has to fiscally support the economy.

Our assumption, therefore, is that further fiscal consolidation should not happen in FY27 – we consider this to be very critical in this budget.

Further, we expect some incentives for the rural economy driven by low food inflation and rising gold and land prices.

Also expected are some incentive schemes for the stressed-out export sector post-US tariffs.

Do you think a focus on fiscal consolidation can curtail government capex- a key driver for growth? How should investors interpret that?

As mentioned above, we do expect some pause in fiscal consolidation in FY27, which will be pro-growth and hence positive for investors.

How do you see Global factors, such as US tariffs, affecting the Indian economy and markets?

Before the current issue, the Indian economy - specifically corporate earnings - was already slowing down in CY24/CY25, and the US tariffs ended up putting additional stress on it.

Apart from services, Indian exports to the US are limited in overall terms but highly profitable for exporters. Hence, it will certainly impact earnings.

Does it make sense to expect earnings to grow in double digits amid all these prevailing headwinds?

Since FY26 had a low base of +6% only, some sectors like BFSI, auto and metals may support 10% to 13% earnings growth. A key risk for this assumption is no major disruptions in the global economy, specifically the heated US economy.

What is your assessment of the early trends of Q3 earnings? Do you find them on expected lines?

IT companies have reported decent earnings, owing to a low base and expectations. However, since banks and other companies (including RIL) missed the mark on an overall basis, our predictions of the early trends suggest the following estimated numbers.

Given Trump's unpredictability, the market may not be fully able to discount tariff impact. How can investors navigate this uncertainty?

When it comes to investing, there will always be headwinds in the form of tariffs, wars, pandemics and others.

It is due to these reasons that we always recommend investors opt for asset allocations. In fact, CY25 has strengthened our multi-asset allocation strategy.

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.