Budget 2026: Markets on edge as ITC, FPIs, Capex and jobs take centre stage

As finance minister Nirmala Sitharaman rises to present Union Budget 2026 on a rare Sunday, markets are listening with sharpened attention — nowhere more so than among ITC investors, foreign funds, and sectors bracing for policy direction.

ITC has emerged as one of the Budget’s most keenly watched stocks after a sharp cigarette tax hike wiped out nearly Rs 1 lakh crore in market value in just a month. With cigarettes still anchoring its profits, investors are desperate for clarity on whether the government will steady tobacco taxation or allow further volatility to cloud earnings and demand.

The Budget also arrives amid persistent foreign portfolio outflows. FPIs pulled nearly Rs 23 billion over the past year, unnerved by currency pressures and post-tax returns.

Hopes are riding on possible targeted tax relief, with market participants watching closely for signals that could revive India’s appeal as a destination for global capital.

On the fiscal front, the government faces a delicate balance. After pushing central capital expenditure to Rs 11.2 lakh crore last year, Budget 2026 will reveal whether New Delhi doubles down on growth-driving infrastructure or pivots toward fiscal consolidation to calm bond markets.

Employment remains another fault line. With wage growth under strain and automation fears rising, expectations are high for measures that boost MSMEs, ease compliance, expand credit, and incentivise job creation in labour-absorbing sectors.

The day also marks immediate changes for consumers, with major banks revising IMPS charges, credit card rewards, and KYC norms, while markets remain open through special Sunday trading sessions to absorb Budget signals in real time.

Beyond numbers, Budget 2026 unfolds against a rich institutional legacy — from the shift to a 1 February presentation to the historic 1955 move that brought Hindi into the Budget’s language — underscoring how fiscal policy continues to shape both markets and the national narrative.