Capital market stocks experienced a sharp surge of up to 8% on Tuesday, extending gains as hopes of LTCG tax relief and renewed FII buying boosted investor sentiment. According to The Economic Times, the Nifty Capital Markets index climbed over 3% to hit a seven-week high of 5,380, driven by an overall market rally and rising expectations for relief on long-term capital gains tax. This broad-based rally was fueled by multiple positive factors including investor hopes of a possible review of the existing tax structure and renewed foreign institutional investor interest in Indian equities.
Angel One emerged as the top gainer, rallying nearly 8%, extending its gains to 32% in 2026 so far. As reported by The Economic Times, Motilal Oswal Financial Services jumped nearly 6%, while Central Depository Services (India) Ltd (CDSL), CAMS and 360 One WAM shares gained around 5% each. Other notable gainers included NAM India, Groww, KFinTech, MCX, BSE, HDFC AMC and IEX shares, which gained 2-3% during the session. This performance represents a significant extension from the previous day's gains, with Angel One's 32% year-to-date performance highlighting the sustained investor interest in capital market-related stocks.
Foreign institutional investors have resumed buying Indian equities after a sharp selloff that rattled Dalal Street. According to provisional data on NSE, FIIs were net buyers of Indian equities on Monday, purchasing shares worth nearly ₹3,115 crore. As reported by The Economic Times, FIIs have remained net buyers of Indian equities in six out of 11 sessions in the second half of October, after remaining net sellers in nine out of 10 sessions in the first half. This shift in foreign investor sentiment is particularly significant given the previous concerns over equity taxation that had contributed to the selloff, suggesting that the government's acknowledgment of investor concerns is beginning to influence market dynamics.
According to Moneycontrol reports, Sitharaman indicated that the government was open to considering feedback from investors on equity taxation, raising hopes of a possible review of the existing tax structure. Responding to questions about whether the upcoming Union Budget could provide a more favorable tax environment for foreign investors, she stopped short of committing to specific changes but acknowledged that circumstances facing investors had changed and that concerns over the taxation regime had become louder. She stated she 'realises the anxieties prevailing among retail investors and equity participants' and that the government recognised the concerns being raised by market participants. 'I quite appreciate it. I will consider all this,' she said, noting that voices of concerns are louder due to changed circumstances.
As reported by Moneycontrol, currently LTCG tax on gains from the sale of equities by foreign and domestic investors is levied at 12.5 percent without indexation benefits. The tax applies to gains exceeding ₹1.25 lakh in a financial year from listed shares, with no such exemption limit for gains from the sale of unlisted shares. Moneycontrol had previously reported on October 26 that a decision to restructure the long-term capital gains tax on equities could be taken in the coming weeks, possibly before the Union Budget. The current rally suggests that market participants are interpreting the government's signals as potentially leading to meaningful tax relief for equity investors.
