Navigating Market Volatility Ahead of Union Budget 2026-27
As India prepares for the Union Budget for the fiscal year 2026-27, investors across the nation are bracing themselves for a period of heightened market volatility. Historically, the days leading up to the Budget announcement have been marked by cautious sentiment, with financial markets reacting sharply to expectations surrounding fiscal priorities, taxation policies, and government spending initiatives. The Union Budget stands as one of the most influential policy events for Indian equities, often reshaping sectoral leadership and driving short- to medium-term market trends.
Budget Expectations and Market Dynamics
This year's Budget is widely anticipated to maintain a strong focus on capital expenditure, manufacturing-led growth, and macroeconomic stability. These priorities come at a time when global uncertainties persist, including challenges around economic growth, geopolitical tensions, and fluctuating interest rates. With valuations in certain market segments appearing stretched and global cues remaining mixed, strategic portfolio positioning ahead of the Budget has become critically important for investors. The goal is to manage risk effectively without missing out on long-term opportunities that may emerge from policy announcements.
Expert Recommendations for Balanced Portfolios
Market experts broadly agree that diversification and balance should be key themes for investors approaching Budget 2026. Rather than taking aggressive sectoral bets, analysts suggest maintaining exposure to stable large-cap stocks while complementing equity positions with defensive and alternative assets.
Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities, emphasizes that portfolios should focus on balance rather than directional calls ahead of the event. "We would recommend maintaining a balanced or hybrid portfolio," Sheth stated. He proposed an ideal allocation that could include:
- 50% in large-cap equities
- 30% in gold
- 10% in silver
- 10% in bonds
This allocation strategy aims to offer stability amid policy-driven volatility while maintaining growth potential.
Technical Perspectives on Portfolio Construction
From a technical analysis standpoint, experts note that large-cap stocks continue to provide relative strength and trend stability during uncertain market phases. Aakash Shah, Technical Research Analyst at Choice Equity Broking, recommends that portfolios should remain core-heavy on large caps while selectively adding mid-cap stocks that show strong technical setups.
Shah highlighted a potential allocation strategy:
- 50-55% exposure to large-cap stocks
- 25-30% allocation to select mid-cap stocks
- Remaining allocation in cash or defensive positions
This approach can help investors take advantage of volatility-driven corrections that may occur after the Budget announcement.
Long-Term Allocation Considerations
While short-term volatility around the Budget is inevitable, experts emphasize that long-term asset allocation should not be overlooked. Investors are advised to align their portfolios with structural growth themes while ensuring adequate downside protection.
Vikas Gupta, CEO and Chief Investment Strategist at OmniScience Capital, stressed that diversified exposure remains essential in the current environment. "A portfolio with 75% allocation to equities, including 20-25% global equities, 20% to fixed income, REITs and InvITs, and 5% to other assets such as gold and silver offers a resilient framework for the year ahead," Gupta noted.
Meanwhile, V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, emphasized prioritizing equity exposure with a tilt towards stability. He suggested that investors should maintain:
- Higher weightage to equities
- Moderate exposure to gold
- Lower allocation to fixed income
- Large caps as core holdings going into the Budget
Strategic Approach for Budget 2026
As Budget 2026 approaches, financial experts unanimously agree that staying diversified, avoiding knee-jerk reactions, and focusing on long-term fundamentals can help investors navigate near-term volatility. This approach positions investors to capitalize on opportunities that may emerge from policy announcements while managing the inherent risks associated with major fiscal events.
Disclaimer: The views and recommendations presented above are those of individual analysts or broking companies, and not of Mint. Investors are advised to consult with certified financial experts before making any investment decisions.
