Budget 2026 playbook: Capex stocks or consumption themes — Where should portfolios lean?

Budget 2026: As the Union Budget 2026 approaches, the familiar debate between capital expenditure and consumption has resurfaced. Finding the right portfolio mix ahead of the mega event is crucial for investors as it could influence the overall return.

Finance Minister Nirmala Sitharaman will unveil the government's fiscal roadmap for the next financial year on February 1 this year. According to Axis Securities, one of the key challenges for the Union Budget 2026 would be to balance capex-led growth with consumption support.

Capex vs Consumption: What would Budget 2026 focus on?

The centre has already set a high public-investment bar with FY26 capex budgeted at ₹11.21 lakh crore. Estimates suggest capex could expand for next year, with Axis Securities pencilling the figure to be at ₹12–13 lakh crore, implying a 10–15% YoY increase.

Public capex has crowded in private investment across infrastructure, power, and manufacturing, with capacity utilisation climbing and order books swelling.

Against this backdrop, Akshat Garg, Head - Research & Product Of Choice Wealth, said that markets have front-run this narrative hard — leaving capex themes richly priced with modest upside left.

At the same time, the macro backdrop is turning supportive for consumption. CPI inflation in December 2025 was ~1.66%, and the RBI has cut the repo rate to 5.25% — both of which improve the odds of rate transmission and EMI relief feeding into discretionary demand. Moreover, income tax cuts and GST relief are further aiding demand revival.

In this setup, investors should expect the Budget to protect capex momentum while using targeted levers to revive mass consumption without blowing up fiscal math, said Harshal Dasani, Business Head at INVasset PMS.

Axis Securities believes the government may support consumption through rural infrastructure and agriculture support, employment and skilling programs, and targeted welfare spending as urban consumption moderates and rural demand remains uneven.

According to Choice Broking's Akshat Garg, consumption also offers fresher alpha. A Budget nudge—say, deeper income tax slabs, PLI extensions for consumer goods, or amplified rural schemes—could ignite a virtuous cycle, he said.

According to Garg, consumption-focused sectors like auto, FMCG, and realty respond nimbly to policy, delivering earnings pops faster than capex’s slow burn.

Budget 2026 playbook

For investors, this backdrop requires a nuanced playbook. The question is no longer whether capex or consumption will lead, but how portfolios should be positioned if 2026 becomes a year of blend with focus on steady public investment along with policy-assisted revival in demand.

Dasani recommended a barbell positioning for portfolios. "Capex-linked themes still have multi-year visibility because public spending keeps crowding in private investment—roads, railways and industrial build-out have strong multipliers. But 2026 could also be the year consumption re-enters leadership if the Budget delivers credible, execution-friendly measures around income support, employment, and targeted tax rationalisation," he said.

He added that the risk is that markets are already pricing a ‘perfect’ capex continuation. The upside surprise will come if consumption breadth improves without compromising fiscal discipline, he said.

Therefore, Dasani recommends that the right call is not ‘capex or consumption’ but owning quality franchises on both sides, with a bias to balance-sheet strength and earnings visibility.

Meanwhile, Garg recommended dialling up quality consumption proxies like leading auto OEMs, FMCG bellwethers, and select realty names with strong balance sheets.

"Retain a capex core for ballast, but let consumption drive the tilt—this pragmatic pivot captures both steady growth and surprise tailwinds through 2026," he advised.

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions.