Whalesbook
### Market Bleeds Amidst Global Headwinds
Indian technology stocks experienced a sharp correction, with 42 out of 50 tracked companies seeing declines between 0.33% and over 20% in the past week. This market recalibration led to a $9.5 billion reduction in the cumulative market capitalization of these firms, bringing the total down to $127.05 billion. The broader market indices mirrored this sentiment, declining by 2.5% amid escalating global trade tensions, substantial Foreign Institutional Investor (FII) outflows, and a depreciating rupee. FIIs have been consistent sellers, offloading equities worth over ₹36,591 crore through January 22, continuing a trend from 2025 [2, 8, 34, 41]. The Indian rupee also hit a fresh all-time low against the US dollar, trading around 91.81, exacerbating investor concerns [16, 44]. This broad market weakness reflects a global economic environment clouded by trade friction and volatile capital flows, with trade growth projected to slow to 2.2% in 2026 [24].
### Startups Urge Budget 2026 for Tax Certainty
As the nation enters the budget season, Indian startups are vocal about critical tax reforms needed in Budget 2026. Founders and investors are pressing for resolution on two key pain points. Firstly, despite the abolition of Angel Tax in July 2024, thousands of startups are still burdened by legacy demand notices and penalties levied under the repealed law [3, 11]. These unresolved liabilities create significant operational strain and act as a deterrent for potential investors, with some founders reporting ongoing penalties and seized funds [3]. Secondly, the dual taxation of Employee Stock Option (ESOP) gains—taxed at exercise and again at sale—continues to impose an upfront cash-flow burden on employees. This issue is particularly acute for early-stage companies and can distort employee incentives and liquidity plans, especially for those nearing an Initial Public Offering [3, 10, 17, 21, 42]. The industry is advocating for a framework where ESOP tax is paid only upon the actual realization of cash from a sale, aligning tax liability with wealth creation. Expectations for Budget 2026 include a comprehensive cleanup of pending Angel Tax cases and a rationalized ESOP taxation structure accessible to all DPIIT-recognized startups, not just those certified by the Inter-Ministerial Board [10, 17]. Regulatory certainty is paramount for unlocking the next phase of growth.
### Funding Resilience Amidst Market Correction
Despite the prevailing market pessimism and macroeconomic headwinds, the Indian startup ecosystem demonstrated resilience in funding activity. Last week, Indian startups collectively secured $302.8 million across 37 deals, a 13% increase from the preceding week [5]. Fintech emerged as the leading sector, attracting $87.2 million, closely followed by Artificial Intelligence, which garnered $82.5 million. E-commerce remained the busiest sector by deal volume, with 10 companies raising $56.4 million [5]. Seed-stage funding also saw a substantial uptick, rising 32% week-on-week to $21.7 million. In a significant milestone, fintech firm Juspay achieved unicorn status, becoming the first of 2026 after raising $50 million at a $1.2 billion valuation [5, 28, 32]. This comes as overall unicorn creation has decelerated, with only six startups achieving the status in 2025 compared to 45 in 2021 [5]. Other notable funding rounds included AI startup Emergent securing $70 million in Series B funding, bringing its total to $100 million within seven months of launch [13, 26, 37, 40]. Adtech unicorn Amagi Media Labs also made its stock market debut, albeit at a discount to its IPO price [5, 15].