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Shares of infrastructure companies gained sharply after the Union Budget 2026-27 proposed an increase in capital expenditure to INR 12.2 lakh crore, reinforcing the government's focus on infrastructure-led growth. Stocks of major engineering and construction firms rose on the BSE as investors reacted positively to the higher outlay and the announcement of an infrastructure risk guarantee fund aimed at attracting private capital. The finance minister presented the budget in Parliament earlier this week, highlighting infrastructure as a key driver of economic expansion amid global uncertainties. Market participants and industry executives indicated that the continued rise in public spending, alongside new risk-mitigation mechanisms, is expected to support long-term capacity creation, job generation and private sector participation across core infrastructure segments.
Infrastructure sector stocks witnessed strong buying interest after the Union Budget 2026-27 proposed an increase in capital expenditure to INR 12.2 lakh crore for FY27, signalling continued government commitment to infrastructure development. The budget was presented in the Lok Sabha earlier this week by Finance Minister Nirmala Sitharaman, with infrastructure positioned as a central pillar of economic growth. Advertisement
On the BSE, shares of several infrastructure and engineering companies closed higher following the announcement. PNC Infratech recorded the sharpest gains, rising nearly 8%, while Sterling and Wilson Renewable Energy advanced over 5%. PVV Infra, Afcons Infrastructure and Ashoka Buildcon also posted gains ranging between 3% and 5%, alongside JSW Infrastructure, which moved higher during the session. The rally reflected positive investor sentiment around increased public spending and supportive policy measures outlined in the budget.
The budget proposed the creation of an infrastructure risk guarantee fund, a move aimed at encouraging private sector participation in infrastructure projects by addressing long-standing concerns around risk allocation and financial viability. Industry experts indicated that such a mechanism could help crowd in private capital, particularly in large and long-gestation projects.
Market participants noted that the proposed capital expenditure for FY27 represents a significant increase from INR 2 lakh crore in FY15 and a steady rise from INR 11.2 lakh crore allocated in the previous financial year. While the year-on-year increase may appear moderate, analysts suggested that the sustained upward trajectory reflects a long-term strategy rather than short-term stimulus.
Executives from the infrastructure and financial services sectors indicated that the budget adopts a balanced approach, combining continued government-led capital expenditure with a commitment to fiscal consolidation. They added that the focus on infrastructure, manufacturing and MSMEs underlines the government's intent to strengthen productive capacity and employment generation across sectors.
Rating agencies also pointed out that the continued rise in capital spending signals a clear policy intent towards long-term capacity creation. The emphasis on innovative financing mechanisms, alongside higher outlays, is expected to help maintain momentum in infrastructure development despite global economic uncertainties and tighter financial conditions.
Source - PTI
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