Budget 2026: Short-Term Market Support Expected; Focus on Strong Earnings Stocks

• HDFC Securities' Varun Lohchab suggests the upcoming budget could boost market sentiment short-term through higher capex, growth policies, and tax benefits.
• Sustainable medium-term market strength hinges on corporate India's earnings growth, with Nifty projected for 12%+ growth in FY27.
• Q3 FY26 earnings are expected to be decent, with Metals and Financials performing well, while Consumption and IT sectors show signs of bottoming out for FY27 growth.
• Rising gold prices have strengthened RBI's balance sheet and forex reserves, despite increasing SGB redemption liabilities for the government.
• The market is currently rewarding stocks with strong earnings and stable margins; bottom-up stock picking is advised over index-based approaches.

Why It Matters: Budget 2026 may offer short-term market support, but long-term growth depends on strong corporate earnings.