India’s Union Budget fallout set to steer global risk sentiment on Monday

Global market sentiment on Monday is likely to be shaped primarily by investors’ reaction to India’s Union Budget 2026, which was presented over the weekend with a rare special trading session on Sunday. Because India is one of the world’s largest and fastest‑growing major economies, and a key component of emerging‑market indices, the way global investors interpret this budget will influence risk appetite across equities, bonds, and currencies. The main focus will be on how the budget balances growth and fiscal discipline. Markets will be watching the projected fiscal deficit path and whether government spending plans—especially on infrastructure, capital expenditure, and social programs—signal continued support for economic growth without sharply increasing borrowing needs. A credible path toward fiscal consolidation tends to be viewed positively by global investors, as it can support currency stability and keep government bond yields in check, which in turn underpins equity valuations. Sector-specific allocations and tax or policy changes will also drive trading patterns and could spill over into global sector sentiment. Higher infrastructure and capital spending may boost outlooks for construction, industrials, and materials, while any changes in consumption-related taxes or subsidies could affect expectations for consumer demand. Shifts in corporate tax policy or incentives for manufacturing, green energy, or technology could influence how investors position across emerging markets more broadly, as India competes for global capital and supply-chain diversification. Because Indian markets traded on Sunday to react in real time, Monday’s session will likely feature follow‑through moves as global investors digest the details, adjust portfolios, and rebalance emerging‑market exposures. Currency markets may react to perceived changes in India’s growth and fiscal trajectory, which can influence broader EM FX sentiment. Overall, the tone of global risk markets on Monday will be heavily influenced by whether the budget is seen as pro‑growth and fiscally responsible (supportive for equities and EM assets) or as raising concerns about higher deficits and inflation (a potential drag on risk appetite).