**Market Brief: Pre-Budget Sentiment & Sector Strategy** **Date:** January 29, 2026 **Executive Summary** Investor sentiment remains guarded as markets approach the Union Budget on February 1, 2026. Volatility has increased, driven by sustained Foreign Institutional Investor (FII) outflows. Data up to January 22, 2026, indicates FIIs have offloaded approximately **₹36,591 crore** in Indian equities this month alone, contributing to a cautious trading environment. Despite this liquidity pressure, expert Neeraj Dewan advises a strategy of selective accumulation in key growth sectors. **Sectoral Outlook & Strategy** **Infrastructure & Capital Goods** * **Strategy:** Selective Buying * **Market Context:** The capital goods sector continues to show resilience, supported by a **14.1%** surge in production figures reported recently. While broader markets have corrected, the underlying fundamentals in infrastructure remain robust due to government spending anticipation. Investors are advised to focus on companies with strong order books rather than chasing momentum. **PSU Banks** * **Strategy:** Buy on Dips * **Market Context:** Public Sector Banks (PSUs) are currently outperforming the broader market. The Nifty PSU Bank index has gained approximately **11%** in January 2026, contrasting sharply with other sectors. Improved asset quality and a reduction in Non-Performing Assets (NPAs) to multi-year lows have strengthened the case for this sector, validating the expert view on attractive valuations. **Power (Generation & T&D)** * **Strategy:** Constructive / Overweight * **Market Context:** The outlook for Power Transmission & Distribution (T&D) and generation remains positive. Analysts project a strong recovery in power demand for 2026, driven by data center expansion and EV adoption. Major players like **NTPC** and **JSW Energy** have seen renewed interest, aligning with the advice to seek opportunities in this space. **NBFCs** * **Strategy:** Caution / Avoid * **Market Context:** The Non-Banking Financial Company (NBFC) sector faces headwinds from regulatory scrutiny and rising cost of funds. While some players like IIFL Finance are signaling confidence through dividends, the broader sector outlook remains mixed. Caution is advised as growth may be range-bound compared to the banking peers. **Real Estate** * **Strategy:** Long-term Accumulation * **Market Context:** The real estate sector has witnessed a sharp correction, with the Nifty Realty index down over **12%** in January 2026—one of its worst starts in a decade. Stocks like Signature Global have seen declines of up to **28%**. This steep correction offers a strategic entry point for long-term accumulation, as the fundamental demand for housing remains intact despite near-term volatility. **Key Takeaway** Volatility is expected to persist through the Budget session. The recommended approach is **defensive yet opportunistic**: protect capital by avoiding high-valuation NBFCs, while using dips to enter infrastructure, PSU banks, and beaten-down real estate stocks for the long haul.