In the first full-year Budget of the Modi 3.0 government, an attempt has been made to achieve a rare trinity — progressive growth with a focus on fiscal consolidation, a continued thrust on capex and defence, and selective consumption stimulus through tax relief, brokerage firm Antique Stock Broking said in a note on Sunday, February 2.

The Union Budget projects 11% growth in capex during FY26 at Rs 15.5 lakh crore, including internal and extra-budgetary resources (IEBR). This includes Rs 11.2 lakh crore worth of capex funded through budgetary support and Rs 4.3 lakh crore through internal and extra-budgetary resources (IEBR).

Key sectors such as renewable energy (+12% YoY), power (+21% YoY), and defence (+13% YoY), housing and urban poverty alleviation (48% YoY) have seen meaningful increase in allocation. There is hardly any increase in allocation to key sectors such as rail and road in FY26.

That said, it is important to note that the allocation to these two key sectors has grown at an aggressive pace over the past four years, and maintaining the allocation is in itself a strong indication of the government’s thrust to these sectors.

Additionally, a meaningful reduction in personal taxation is a significant step in providing relief to the middle class and a shot in the arm to boost consumption selectively, Antique said.

Tax relief may selectively aid consumption revival

Budget 2025 aims to reduce income tax liability (₹1 lakh crore) by increasing tax rebates and tweaking income tax slabs under the new tax regime. The brokerage believes that the tax relief may help spur consumption, especially in low-ticket discretionary items, and result in taxpayers shifting significantly to the new tax regime.

However, it said the budget may not provide overall consumption support given FY26BE gross tax revenue growth assumption of 10.8% year-on-year and revenue expenditure (ex-interest) growth of 4.2% YoY along with fiscal consolidation.

For stock-specific investors, the brokerage sees significant upside in several small-cap stocks—

Senco Gold (+72% upside)

Transformers & Rectifiers (India) (+69%)

Titagarh Rail Systems (+65%)

Quess Corp (+63%)

Arvind Fashions (+42%)

Kirloskar Pneumatic (+28%)

Paradeep Phosphates (+20%)

Allied Blenders & Distillers (+19%)