Budget 2026, Jan. 26 -- There is a lot of clamour in the Indian stock market for a reduction in the long-term capital gains (LTCG) tax amid the sharp underperformance by the Indian stock market over the past year, amid relentless selling by foreign portfolio investors (FPIs).

Last year, the BSE Sensex rose almost 9% as it extended its annual bull run to the 10th year in a row. However, this return was comparatively much smaller than the 16-68% returns offered by some of its Asian peers, including Pakistan's KSE 100 index.

India's underperformance last year was not about weak fundamentals, but about sentiment and missing foreign flows. The Indian stock market faced a record FPI selloff witnessed in 2025, which is continuing this year as ...