Indian equity markets registered solid gains as investor sentiment improved following optimism around the India–European Union trade agreement and expectations from the upcoming Union Budget. Benchmark indices moved higher, led by strong buying interest in defence and infrastructure-related stocks, which are widely seen as key beneficiaries of government spending plans.

The positive mood in the markets was driven by reports indicating progress on a landmark trade deal between India and the EU. Investors believe the agreement could significantly boost exports, enhance foreign investment flows, and strengthen India’s position in global supply chains. The deal is expected to open up European markets further for Indian manufacturers across sectors such as engineering, automobiles, textiles, and pharmaceuticals.

Defence Stocks Shine on Budget Expectations

Shares of defence companies outperformed the broader market as traders positioned themselves ahead of the Union Budget. Market participants anticipate a higher allocation for defence capital expenditure, aligned with the government’s push for indigenisation under the “Make in India” and “Atmanirbhar Bharat” initiatives. Defence public sector undertakings and private players saw strong buying interest, reflecting confidence in long-term order visibility and export opportunities.

Infrastructure and Capex Plays Gain Momentum

Infrastructure stocks also moved higher on expectations that the government will continue its focus on capital expenditure to support economic growth. Companies linked to construction, railways, roads, and urban development benefited from hopes of sustained public investment and policy continuity in the Budget.

Broader Market Sentiment

Beyond sector-specific gains, overall market sentiment was supported by stable global cues and easing concerns over inflation and interest rates. Analysts noted that the combination of trade-related optimism and budget-led expectations is encouraging investors to selectively increase exposure to growth-oriented sectors.