Citi prefers themes of defence, affordable housing ahead of India's federal budget

Bharat Electronics

21/01/2026 05:11

** Citi Research expects India's federal budget for fiscal year 2027 to offer limited support for consumption and to stay anchored on targeted priorities such as affordable housing and health insurance

** Sees the government maintaining a strong tilt toward public capital expenditure, with spending budgeted above nominal GDP growth and led by defence outlays

** Citi adds that fiscal consolidation must continue even as options to raise tax revenues narrow after major cuts to corporate tax, personal income tax, and the GST regime

** Ahead of the February 1 budget, it flags defence as a preferred theme, naming Bharat Electronics BAJE.NS as a top pick

** Also favours affordable housing plays such as Aavas Financiers AVAS.NS and Aadhar Housing AADA.NS

** Citi says domestic manufacturing competitiveness could improve if the government overhauls the customs duty architecture

** Adds that any tweaks to buyback or dividend taxation, or to the STT and capital gains regime, would directly move capital markets and remain key monitorables

(Reporting by Bharath Rajeswaran in Bengaluru)

((bharath.rajeswaran@thomsonreuters.com; +91 9769003463;))