SBI Research recommends abolishing the equity LTCG tax to curb market volatility, protect against foreign outflows, and boost domestic retail savings.
SBI Research has formally proposed the removal of the Long-Term Capital Gains tax on equity investments to incentivize domestic retail investors and stabilize market conditions. The report argues that eliminating the levy would encourage long-term domestic capital formation and reduce vulnerability to sudden capital outflows.
Understanding the Foreign Capital Pressures
The Indian equity market is currently heavily influenced by volatile foreign institutional investment flows, commonly known as hot money. Foreign Portfolio Investors withdrew massive sums from Indian equities during 2026, driven by global macroeconomic factors.
Key outflow data points highlight the scale of recent withdrawals:
- Rs 3 lakh crore withdrawn by FPIs from Indian equities in 2026.
- Rs 44,166 crore pulled out by foreign investors in October alone.
- 12.5% current LTCG tax rate applied to equity investments.
These external pressures stem from higher US bond yields, a stronger US dollar, and an artificial intelligence-led rally drawing capital toward North Asian markets. SBI Research suggests that anchoring domestic savings can insulate the economy from these external shocks.
Corporate Actions and Fundraising at Jubilant Pharmova
Amid broader macroeconomic discussions, significant corporate market activity unfolded as Quant Mutual Fund offloaded a stake in Jubilant Pharmova. The pharmaceutical firm is simultaneously pursuing substantial fundraising initiatives to support its operations.
Key corporate transaction details include:
- 20.81 lakh shares of Jubilant Pharmova sold by Quant Mutual Fund in a block deal.
- Rs 190.47 crore total value of the block deal executed by Quant Mutual Fund.
- 11 lakh shares acquired by Abakkus Four2Eight Opportunities Fund as a buyer.
- Rs 800 crore approved fundraising target via non-convertible debentures and other securities.
These transactions coincide with financial adjustments following a challenging first quarter for the pharmaceutical company. Jubilant Pharmova reported a profit decline alongside revenue growth, influenced by higher depreciation and operating costs.
Removing the equity LTCG tax would mark a major shift in India’s fiscal policy framework, directly targeting structural reliance on foreign capital. Whether policymakers adopt these recommendations to bolster domestic market resilience remains to be seen.
