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Potential Equity LTCG Tax Cut Could Boost Foreign Inflows, Support Rupee: Jefferies
A Jefferies report suggests reducing India's equity Long-Term Capital Gains tax could improve foreign investor sentiment and support the rupee, as discussions around potential tax cuts have gathered pace.
Foreign portfolio investors have withdrawn USD 110 billion from India since April 2025, which Finance Minister Nirmala Sitaraman blamed on 'ease of liquidity, ease of availability' in domestic markets.
Financials recorded net FPI outflows of USD 16 billion between October 2024 and September 2026, while LTCG and securities transaction tax accounted for 8 per cent of direct taxes and 5 per cent of gross revenue in FY25.
Finance Minister Sitaraman called potential capital gains tax cuts a 'healthy debate to have,' though she remains noncommittal regarding specific changes in the forthcoming Budget.
Analysts at Jefferies prefer large-caps, which currently trade at a 23 per cent valuation discount to mid-caps, and favor Banks, Energy , Utilities, and Real Estate within oversold sectors.