Budget 2026: 11-13% Capex Boost, RBI Prioritizes Liquidity, Says Equentis CIO

• Equentis CIO Jaspreet Singh Arora expects a "continuity budget" with an 11-13% increase in capital expenditures and a focus on manufacturing through PLI schemes for AI, semiconductors, defence, and critical minerals.
• The RBI is likely to prioritize liquidity support and rate transmission in its February policy, rather than outright monetary easing, due to solid growth and persistent inflation.
• Donald Trump's aggressive tariff policies and geopolitical ambitions are identified as the biggest short-term threat to equity markets, causing FII selling and rupee depreciation.
• The Union Budget is expected to be reform-oriented within tight fiscal constraints, focusing on deregulation, ease of doing business, PSU disinvestment, and PLI extensions.
• IT sector stocks are considered opportune for accumulation due to reasonable valuations, AI-driven deal ramp-ups, and an anticipated recovery phase in CY2026.

Why It Matters: The upcoming budget will boost capex and manufacturing, while RBI focuses on liquidity amid global tariff threats.