While expectations for immediate relief or major changes may not be high, several key policy directions could significantly impact PSU stocks.
Ahead of the Union Budget, a key area of focus has been the government's strategy for disinvestment. Recent reports suggest that disinvestment proceeds are likely to remain subdued in FY26, with UBS projecting a target of Rs 30,000 crore, marking the fifth consecutive year of downward revisions.
Nomura also expects the government to maintain its current disinvestment target despite challenges, noting that lower disinvestment receipts and a downward revision of nominal GDP growth could offset the savings from reduced capital expenditure.
The PSU banking sector has seen a notable turnaround, aided by recapitalisation measures and reforms introduced over the past few years. The government's focus on financial inclusion, coupled with strong capital infusion strategies, has helped PSU banks recover from past losses.
Stocks like SBI and Bank of Baroda may continue to benefit from any further initiatives aimed at improving the sector's profitability and asset quality, which could be positively impacted by Budget announcements related to banking reforms and recapitalisation.
The government is expected to continue incentivising the growth of renewable energy, and this could provide a boost to PSUs like NTPC (with its renewable energy transition plans) and GAIL India (which could benefit from clean energy-focused policies).
The potential inclusion of green energy incentives, the expansion of India's gas pipeline infrastructure, and a focus on improving domestic energy production are all factors that can benefit energy-related PSUs.
With major focus being given to expanding rural broadband connectivity and 5G rollout, telecom PSUs like BSNL and MTNL are likely to benefit from the ongoing BharatNet project and spectrum policy reforms.
Meanwhile, the government expected to focus on operational efficiency as well, particularly in core-sector PSUs such as NMDC Steel, Shipping Corporation of India, and IDBI Bank, where there has been a recent surge in investor interest. These stocks have seen significant growth in market capitalisation as investors bet on the continued growth and efficiency improvements in these companies.
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