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News › Financial Services  ·  13 Oct 2026, 10:53 AM IST  ·  7 days ago

Bullish read: SBI Research Calls for LTCG Tax Abolition to Boost

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Source: Economic Times · AI-summarised by Anadi · Updated 13 Oct 2026, 11:17 AM IST

Financial Servicestilt positive
Equity Marketstilt positive

What Happened

SBI Research has advocated for the removal of the Long-Term Capital Gains (LTCG) tax on equities and suggested extending the holding period to 2-3 years. This recommendation is a direct response to substantial foreign portfolio investor (FPI) outflows from the Indian market, aiming to make Indian equities more attractive to global investors.

Why It Matters (for you)

This proposal is highly significant for the Indian stock market as it addresses a key deterrent for foreign capital. Abolishing LTCG tax could substantially improve the net returns for long-term investors, potentially reversing the trend of FPI outflows and injecting much-needed liquidity and confidence into the market. It signals a potential policy shift that could have a broad positive impact.

Impact on Indian Markets

If implemented, the abolition of LTCG tax would be broadly positive for all Indian equities, particularly large-cap stocks that are typically favored by FPIs, impacting indices like NIFTY50 and SENSEX positively. Financial services companies (e.g., brokerages, asset management companies) could also see increased activity. The move would likely reduce selling pressure and encourage longer-term holding periods across the board.

What Traders Should Watch Next

Traders should closely monitor any official statements or discussions from the Ministry of Finance or SEBI regarding this recommendation, especially in the run-up to the next Union Budget. Any indication of policy consideration or implementation would be a strong bullish read. Also, watch FPI flow data for signs of reversal, which could precede or follow such a policy change.

Key Evidence

  • SBI Research recommends abolishing the long-term capital gains tax on equities.
  • The report suggests extending the holding period to two to three years to boost investor morale.
  • The recommendation is aimed at revitalizing investment levels and addressing foreign portfolio outflows.
  • Risk flag: Adverse USFDA observations or regulatory changes
  • Risk flag: Increased pricing pressure in key markets