Budget 2026 Highlights: What Investors Need to Know

The Union Budget 2026 is out, and while it has stirred conversations around GDP growth, fiscal deficit, and capital expenditure, the real question for most investors is: how does this impact my portfolio? One of the most notable elements this year has been the hike in Securities Transaction Tax (STT), which ended up overshadowing even the record-breaking infrastructure allocations and capital expenditure plans.

In this blog, we’ll break down the key updates from Budget 2026, with a focus on what truly matters to market participants and retail investors. From policy changes affecting F&O traders and mutual fund investors to sectors that got a solid boost, here’s what you need to know.

STT Hike: Not Just an F&O Story  

The Budget increased STT across futures and options:

• Futures: From 0.02% to 0.05%

• Options Premium: From 0.1% to 0.15%

• Exercise of Options: From 0.125% to 0.15%

Why It Matters:  

The stated reason for this move is to curb speculative trading and promote long-term investing. However, the increased cost will directly impact:

• Retail Traders: Especially those engaged in frequent trading.

• High-Frequency and Algorithmic Traders: As their margins are narrow, even a slight rise in transaction cost can eat into returns.

• Arbitrage Mutual Funds: As shown by Edelweiss Mutual Fund’s CEO, the return from arbitrage funds could drop by up to 0.9% due to the STT hike.

• FIIs: Since many hedge their positions through derivatives, their cost of hedging will increase.

Buyback Taxation: A Shift in Strategy  

Starting from 1st April, all shareholders - whether promoters or retail investors - will pay Capital Gains Tax on buybacks.
Also:

• Corporate Promoters: Will now face an effective tax rate of ~22%

• Non-Corporate Promoters: May see their tax rate go up to ~30%

This change is intended to ensure fairness and prevent the misuse of buybacks by promoters.

SGBs: End of the Tax-Free Illusion?  

Sovereign Gold Bonds (SGBs) saw a sharp 10% drop in the secondary market the day after the Budget. Here’s why:

• Earlier Rule: Capital gains were tax-exempt if held till maturity, regardless of whether the bond was bought in the primary or secondary market.

• New Rule: Now, only bonds purchased in the primary issue and held till maturity enjoy tax exemption.

Also:

• The 2.5% annual interest remains fully taxable.

• If sold before maturity, SGBs will attract:

• Short-Term Capital Gains (STCG): 20% if held for less than 12 months

• Long-Term Capital Gains (LTCG): 12.5% if held for more than 12 months

Sectors That Gained Big from Budget 2026  

Several high-growth industries received strong policy and budgetary support, creating long-term tailwinds for companies operating in these sectors.

1. Data Centres and Cloud Infrastructure  

A bold move was announced to attract global tech giants to India:

• Tax Holiday till 2047: For foreign companies offering cloud services via Indian data centres.

• Local Entity Requirement: These companies must serve Indian clients through a domestic reseller, ensuring tax compliance.

Key Stocks to Watch:

• Anant Raj Ltd – Focused on building data centre parks

• E2E Networks – Specialises in cloud and HPC infrastructure

• Netweb Technologies – Indian OEM for high-end computing

• Techno Electric & Engineering – Recently commissioned a 36 MW AI-ready hyperscale data centre

2. Infrastructure & Logistics  

• Capital Expenditure Allocation: ₹12.2 lakh crore

• Effective CapEx for FY27: ₹17.14 lakh crore

• Indian Railways CapEx: Record ₹2.93 lakh crore

• 20 New National Waterways: Aiming to double coastal cargo share by 2047

Key Stocks:

• Larsen & Toubro (L&T) – Around 50% of revenue and order book comes from infrastructure

• Jupiter Wagons, IRFC, RITES, Quadrant Future Tek – Rail infrastructure players

• Container Corporation (Concor) – Logistics and inland waterways

3. Healthcare & Biopharma  

• Health Ministry Budget: ₹1.06 lakh crore (up by ~10%)

• Biopharma SHAKTI: ₹10,000 crore scheme for biologics and biosimilars

• Customs Duty Exemptions: On 17 critical drugs

Key Players:

• Biocon, Sun Pharma, Dr. Reddy's – Biologics and biosimilar manufacturing

• Apollo Hospitals, Medanta – Beneficiaries of growing medical tourism and infra

4. Technology & Manufacturing  

• ISM 2.0: New semiconductor ecosystem programme

• Electronics Component Scheme: Outlay increased to ₹40,000 crore

Key Stocks:

• Dixon Technologies – Major EMS player in mobile segment

• CG Power, Kaynes Technology – Expected to begin commercial production

• Hindustan Copper – Included in the Rare Earth Corridors push

5. Defence and Deep-Tech  

• Defence Budget: ₹7.85 lakh crore (15% increase YoY)

• Domestic Procurement: ₹1.39 lakh crore reserved

• New Fund: For dual-use deep-tech startups in defence and space tech

Notable Players:

• HAL, BEL, Data Patterns – Active in avionics, systems, and defence electronics

Conclusion

While the STT hike has raised concerns, Budget 2026 also introduced several long-term growth catalysts in infrastructure, healthcare, and digital India ambitions. Tax changes in buybacks and SGBs could shift investor strategies, but overall, the Budget reinforces the government's vision of sustainable and inclusive growth with a sharp focus on capex-driven development.

Disclaimer  

This blog is for educational and informational purposes only. It does not constitute investment advice or a recommendation to buy, sell, or hold any security. The companies mentioned are cited based on publicly available information from the Budget 2026 and related discussions.