With the 2026 Union Budget approaching, market expectations are tempered as fiscal discipline remains a priority. Analysts highlight the Public Sector Enterprises and IT sectors as promising, while also cautioning about market volatility and external risks potentially impacting investor confidence.
As Finance Minister Nirmala Sitharaman gears up to unveil the Union Budget for 2026 on Sunday, February 1, those in the market are tempering their expectations for significant spending surprises. Analysts generally anticipate that fiscal discipline will be maintained, with minor increases aimed at sectors that require strong execution rather than major policy overhauls.
Financial experts have pointed out that limited fiscal capacity is likely to steer the government toward speeding up structural reforms and encouraging private investment, instead of increasing overall funding.
Analysts anticipate that volatility around budget day will remain elevated, with potential sell-offs likely if fiscal measures fall short or targets are missed, which could lead to increased bond yields and tighter liquidity conditions.
External risks include geopolitical tensions, currency fluctuations, and disruptions in global trade, while delays in implementing domestic policies might undermine investor confidence.
According to experts, concerns about overvaluation, foreign institutional investor outflows, and a possible collapse of the AI bubble are further obstacles that could hinder the Nifty 50’s ascent toward 29,000 by 2026.
Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, discusses trading strategies, and the sectors and stocks to be on the lookout on Sunday, February 1, 2026.
The recent decisive move beyond this hurdle marks a multiple pattern breakout. From a short-term perspective, prices have broken out of a rising channel, while on a higher time-frame, the weekly chart reveals a classic Cup and Handle formation — a pattern typically associated with strong continuation moves.
Following this breakout after a prolonged consolidation, the index is expected to witness renewed momentum and relative outperformance. In the near term, prices may advance towards all-time highs around 11,500, making any intermediate dip a buying opportunity rather than a cause for concern.
Preferred stocks from the PSE basket: Oil and Natural Gas Corporation Ltd (ONGC), NTPC Ltd, NMDC Ltd, Coal India Ltd, Bharat Petroleum Corporation Ltd (BPCL).
The sector has started forming a higher top-higher bottom structure, indicating a change in trend. Additionally, RSI readings have moved above 60 across daily, weekly, and monthly time frames, signalling broad-based bullish strength. Notably, during the recent phase of market panic, IT stocks displayed relative resilience, highlighting underlying accumulation.
Given these technical developments, the IT sector is well-positioned to deliver steady performance in the coming weeks, especially if market volatility persists.
Preferred stocks from the IT space: Tech Mahindra Ltd, Infosys Ltd, HCL Technologies Ltd.
