Shares of Public Sector Undertakings (PSUs) experienced significant declines on Saturday, marking their sharpest budget-day losses in the past seven years. The BSE PSU index fell by 2.7%, with 57 scrips ending in the red, reflecting investor disappointment with the capital expenditure (capex) allocation outlined in the Union Budget 2025-26.
Budget Falls Short of Investor Expectations
The Union Budget revealed a capital expenditure outlay of ₹11.2 lakh crore for FY26, which, despite being a modest increase from the revised ₹10.18 lakh crore for FY25, fell short of market expectations of ₹11.5 lakh crore. The revised estimate for FY25 was also lowered from the originally allocated ₹11 lakh crore, further contributing to the subdued market sentiment.
The government’s decision to prioritize consumption and fiscal prudence over aggressive infrastructure spending dampened hopes for a stronger capex push, particularly for sectors such as roads, railways, renewables, power transmission, and defence.
Major Declines in PSU Stocks
| Stock Name | BSE (%) | NSE (%) |
|---|---|---|
| Hindustan Petroleum Corporation (HPCL) | -5.41% | -5.45% |
| Bharat Electronics Ltd. | -5.00% | -4.86% |
| Bharat Heavy Electricals Ltd. (BHEL) | -4.20% | -4.26% |
| Bharat Petroleum Corporation Ltd. (BPCL) | -3.91% | -3.85% |
| Engineers India Ltd. | -4.52% | -4.10% |
| Garden Reach Shipbuilders & Engineers | -6.26% | -6.30% |
| Coal India Ltd. | -3.46% | -3.41% |
| Dredging Corporation | -5.00% | -4.65% |
| Mazagon Dock Shipbuilders Ltd. | -5.80% | -5.78% |
| Container Corporation of India Ltd. | -3.97% | -3.83% |
| Housing and Urban Development Corp. | -8.63% | -8.69% |
| Indian Oil Corporation (IOC) | -2.75% | -2.62% |
| Mahanagar Gas Ltd. | -4.29% | -4.15% |
| Nalco | -3.97% | -3.82% |
Muted Capex Growth and Market Concerns
The subdued growth in capex has raised concerns about muted infrastructure development, particularly at a time when India’s GDP is showing signs of slowing. Investors were expecting robust investments to boost capex-linked PSUs, particularly in sectors such as railways, defence, and infrastructure. However, the budget’s cautious approach has fueled apprehension among market participants.
