**Market Brief: Budget 2026 & Structural Frictions** **Current Market Landscape (Jan 25, 2026)** The Indian markets are trading with a cautious undertone ahead of the Union Budget. The **Sensex** is hovering around **82,300**, while the **Nifty50** has slipped below the **25,100** mark. Volatility is elevated, driven by significant foreign outflows; Foreign Institutional Investors (FIIs) have pulled out approximately **$2.1 billion** in the first half of January 2026 alone, exerting pressure on the rupee and broader indices. **The Friction Point: Taxation Review** WhiteOak CEO Aashish Somaiyaa emphasizes that the immediate priority for Budget 2026 should be addressing "structural market frictions" rather than announcing new headline reforms. * **Double Taxation Concern:** The current framework levies **Securities Transaction Tax (STT)** (currently **0.1%** on delivery) alongside Capital Gains Tax. * **Dividend Tax Burden:** Dividends are distributed from corporate post-tax profits and subsequently taxed again at the shareholder's slab rate. Somaiyaa argues this layering creates a "double taxation" effect that penalizes capital formation and needs urgent review to restore market efficiency. **Structural Continuity: Atmanirbhar Bharat** Despite short-term volatility, the structural story remains intact. * **Policy Continuity:** Somaiyaa views *Atmanirbhar Bharat* not as a one-off scheme but as a continuity-led strategy. * **Sectoral Impact:** This is evidenced by the **9.5%** increase in defence budget allocation (reaching **₹6.81 lakh crore** for 2025-26) and sustained Production Linked Incentive (PLI) schemes driving manufacturing in electronics and defence. **Outlook: Macro Stability is Key** Addressing the cyclical nature of FII flows, Somaiyaa stresses that foreign capital chases macro stability rather than short-term incentives. With FIIs currently in a selling mode due to global geopolitical cues and valuation concerns, maintaining fiscal prudence and a stable tax environment in Budget 2026 will be critical to reviving foreign investor confidence. *** [WhiteOak CEO on Market Reforms](https://www.youtube.com/shorts/AxMZcoQIR0g) This video is relevant because it features Aashish Somaiyaa discussing WhiteOak's investment framework and multi-asset strategy, providing direct insight into the thinking behind the market views summarized above. http://googleusercontent.com/youtube_content/0