Best Sector ETFs after Budget 2026: Top 10 Picks for Retail Investors

The presentation of the India Union Budget 2026 on February 1, 2026, has marked a definitive shift in the nation’s economic trajectory. Moving from digital foundations to a high-value, technology-intensive manufacturing ecosystem, the Finance Ministry has provided a clear roadmap for the retail investors.

With a record Capital Expenditure (Capex) of ₹12.2 lakh crore, the government is signaling that state-led infrastructure development is reaching a new zenith. For retail investors, navigating this post-budget landscape requires moving beyond speculation into systematic, theme-based investing.

Here are the Top 10 Best Sector ETFs after Budget 2026 analyzed in detail.

Defence ETFs: The Sovereign Shield

The defence sector is the primary beneficiary of the budget, with a total outlay of ₹7.85 lakh crore. The government is pushing for 100% indigenization of critical components.

• The Deep Dive: This budget funds the procurement of Tejas Mk2 aircraft, indigenous submarines, and advanced missile systems. Companies like HAL and BEL have order books stretching over the next 5-7 years.
• Investor Strategy: Investing in individual stocks can be risky due to lumpy contract cycles. Defence ETFs average this risk across public and private players.
• Top Picks: Motilal Oswal Nifty India Defence ETF, Groww Nifty India Defence ETF.

Railways & Logistics: The Modern Backbone

The Ministry of Railways received its highest-ever allocation of ₹2.93 lakh crore. The focus is on the Kavach 4.0 safety system and high-speed rail corridors.

• The Deep Dive: Seven new high-speed rail corridors (like Chennai-Bengaluru) are being developed as “growth connectors.” This creates massive demand for rolling stock, signaling technology, and steel.
• Investor Strategy: Look for ETFs that capture the PSU (Public Sector Undertaking) dominance in this sector, as they hold the primary contracts.
• Top Picks: Groww Nifty India Railways PSU ETF, Nippon India ETF Nifty Infrastructure BeES.

Semiconductors: The ISM 2.0 Revolution

Under India Semiconductor Mission (ISM) 2.0, the government has allocated ₹40,000 crore to build a domestic chip ecosystem.

• The Deep Dive: India is moving from “assembly” to “fabrication.” Major projects in Gujarat and Maharashtra are now receiving fiscal support to produce semiconductor equipment and materials locally.
• Investor Strategy: Since there isn’t a “pure-play” Semi-ETF, technology ETFs that include companies like Dixon, Tata Elxsi, and BEL are the best proxies.
• Top Picks: ICICI Pru Nifty IT ETF, Mirae Asset Nifty IT ETF.

Biopharma & Healthcare: The SHAKTI Mission

The Biopharma SHAKTI mission (₹10,000 crore outlay) aims to make India a global hub for biologics and biosimilars.

• The Deep Dive: The budget supports 1,000 new clinical trial sites and upgrades for NIPERs. This shift moves Indian pharma from “cheap generics” to “complex, high-value biologics” for diseases like cancer.
• Investor Strategy: Use healthcare ETFs to capture the growth of hospitals and biotechs simultaneously.
• Top Picks: ABSL Nifty Healthcare ETF, Mirae Asset Nifty 500 Healthcare ETF.

Precious Metals: The “Liquidity Rupture” Play

The 2026 budget coincided with a 12% plunge in gold and a 30% nosedive in silver due to global margin calls.

• The Deep Dive: The government has simplified the tax structure for Gold/Silver ETFs to a flat 12.5% LTCG after one year. This makes them more attractive than physical gold for the middle class.
• Investor Strategy: Use this correction as a “healthy reset” to enter at lower price points for a 3-year horizon.
• Top Picks: Nippon India Silver ETF, HDFC Gold ETF.

Green Energy: The Hydrogen Frontier

With an allocation of ₹32,914 crore to the MNRE, the budget focuses on Green Hydrogen and battery storage (BESS).

• The Deep Dive: The government is providing “Viability Gap Funding” for offshore wind projects and 4,000 MWh of battery storage. This is critical for stabilizing the national grid as solar power scales.
• Investor Strategy: Public sector power companies (NTPC, NHPC) are leading this transition. Look for ETFs with a heavy utility weightage.
• Top Picks: CPSE ETF, Nifty Next 50 ETF.

Banking & BFSI: The Credit Engine

While not a “thematic” budget for banks, the focus on fiscal consolidation (4.3% deficit) is a huge win for the BFSI sector.

• The Deep Dive: A lower deficit means lower government borrowing, which keeps interest rates stable and liquidity high in the banking system. This allows private banks like HDFC and ICICI to expand their loan books profitably.
• Investor Strategy: Bank Nifty is currently outperforming Nifty 50. This is a “safety” play for retail investors.
• Top Picks: Nippon India ETF Bank BeES, Kotak Nifty Bank ETF.

Tourism & Archaeological Heritage

Budget 2026 announced “Thematic Tourism Trails” and a massive upgrade of 15 iconic heritage sites to global standards.

• The Deep Dive: This isn’t just about travel; it’s about infrastructure—hotels, airports, and local transport. The “Purvodaya” initiative also targets tourism in the North-East.
• Investor Strategy: Focus on consumption-based ETFs that include aviation and hospitality stocks.
• Top Picks: ICICI Pru Nifty Consumption ETF.

Digital Agriculture: Bharat-VISTAAR

The Digital Agriculture Mission received ₹1.7 lakh crore to bring AI and data-driven farming to 140 million farmers.

• The Deep Dive: This “Uber-ization” of farming involves drones, IoT, and multilingual AI tools. It benefits companies involved in agri-chemicals and farm mechanization.
• Investor Strategy: Capture the rural recovery story as farmer incomes rise due to better market access.
• Top Picks: Mirae Asset Nifty FMCG ETF.

Deep-Tech & R&D Innovation

The budget established a ₹1 lakh crore R&D Fund to encourage private-sector innovation in AI and space-tech.

• The Deep Dive: The government will provide long-term, low-interest loans for deep-tech startups. This is aimed at creating “Indian IPs” in the global market.
• Investor Strategy: This is a long-term “growth” play. Focus on manufacturing and technology-focused ETFs.
• Top Picks: Mirae Asset Nifty India Manufacturing ETF.