Budget 2026: Four Infrastructure Stocks Showing Technical Promise Amid Capex Hopes
As the Union Budget 2026 approaches, scheduled for 1 February, the infrastructure sector is once again moving into sharp focus for market participants. This heightened attention stems from the government's continued emphasis on capital expenditure-led growth, a strategy that has historically made infrastructure a budget favorite. Market expectations currently center on a potential 10-15% increase in capital expenditure, reinforcing the long-term intent outlined in the National Infrastructure Pipeline.
Roads, railways, urban infrastructure, and housing are anticipated to remain priority areas, even as the government maintains its agenda of fiscal consolidation. Furthermore, targeted policy support for emerging sectors like aviation, space infrastructure, and real estate could significantly broaden opportunities across the entire infrastructure landscape. Analysts believe such budgetary measures may improve credit flow to infrastructure-linked MSMEs, accelerate project execution through enhanced digital processes, and bolster order inflows for engineering and construction companies.
Technical and Fundamental Assessment of Key Stocks
From a stock-specific and technical perspective, several prominent infrastructure names are currently in corrective or consolidation phases. This reflects the broader market caution prevailing ahead of the crucial budget event. A detailed analysis of four key stocks reveals both challenges and opportunities.
IRB Infrastructure Developers Ltd has witnessed a sharp correction on the weekly chart, declining from the ₹77 zone to trade around the ₹40 level. Technically, the stock remains weak in the near term. However, the ₹44 area has emerged as a crucial level to monitor. A sustained move above this zone could potentially open the door for a meaningful bounce-back. Fundamentally, the stock is trading at approximately 1.16 times its book value, which appears reasonable for a road developer at this stage of the cycle. A positive sign is the sharp improvement in debtor days from 48 to 16, indicating enhanced working capital efficiency. Nevertheless, a low interest coverage ratio remains a key balance-sheet concern that could continue to cap upside potential unless operating performance shows marked improvement.
Larsen & Toubro Ltd, a bellwether for capital goods and construction activity, continues to be in a broader uptrend on the weekly chart despite a recent dip from the ₹4,188 zone to around ₹3,780. Momentum indicators remain supportive, with the MACD staying positive and the ADX near 28, indicating healthy trend strength. Technically, the recent correction appears more like a retracement within a larger uptrend rather than a structural breakdown. Fundamentally, the company maintains a healthy dividend payout ratio of around 33%. Its valuation at a Price-to-Earnings ratio of roughly 32 appears reasonable given its stellar execution track record and robust order book. The long-term structure remains constructive as long as the stock holds above the critical ₹3,400 region.
In the railways space, Rail Vikas Nigam Ltd (RVNL) has undergone a deep correction from the ₹650 zone to around ₹322 levels. On the weekly chart, the stock is now trading close to a major support band near ₹290, which is an important level from a medium-term perspective. If this zone holds firm, the stock could see a recovery of 15–20% over time, particularly if budget allocations for railway modernization and project execution surprise on the upside. Fundamentally, RVNL has delivered a strong median sales growth of 25.8% over the past decade, although growth over the last five years has been relatively muted at 6.52%. Investors should note that recent earnings include a sizeable contribution from other income, which slightly dilutes the quality of reported profitability.
Within the cement segment, UltraTech Cement Ltd continues to demonstrate technical resilience on the weekly chart. Momentum indicators remain supportive, with the MACD around 31 and the RSI close to 60, signalling a clear underlying uptrend. With the stock currently trading near ₹12,353, the chart structure suggests scope for further upside toward the ₹14,000 zone over the medium term, provided broader market conditions remain stable. On the fundamentals side, the company maintains a healthy dividend payout ratio of about 29.4%, reflecting strong cash generation. However, the stock is trading at nearly five times its book value, which represents a valuation risk investors should be mindful of, especially if cost pressures or demand slowdowns emerge in the sector.
What to Watch For in the Coming Weeks
While the infrastructure pack is witnessing short-term technical pressure and consolidation ahead of Budget 2026, the medium- to long-term narrative for the sector remains firmly intact. Markets are likely to stay cautious in the immediate run-up to the budget announcement. However, a clear, capex-driven growth signal from the government could trigger selective buying, particularly in stocks that show early signs of reversal on the charts.
Key factors to monitor include price action around critical support and resistance levels, volume expansion in the post-budget period, and momentum indicators such as the RSI and MACD, which will be critical in confirming any sustained upward movement. As always, the sector's overall trajectory will also depend on broader macroeconomic factors. These include global commodity price trends, domestic and international interest-rate expectations, and the government's ability to skillfully balance growth priorities with fiscal discipline.
With infrastructure firmly embedded in India's long-term growth story, Budget 2026 holds the potential to once again set the decisive tone for the sector in the months ahead. Investors are advised to watch these technical levels and fundamental metrics closely as the budget details unfold.
Ankush Bajaj is a Sebi-registered research analyst. Investments in securities are subject to market risks. Readers are advised to consult with certified experts before making any investment decisions.
