Equities are gaining ground in India,driven by favorable government policies and tax reforms,reports JP Morgan. Changes make equity investment more appealing,especially as market returns have been weak for two years.
Tax tweaks like 12.5% long-term capital gains tax on equities,removal of indexation benefits,taxation on insurance proceeds make equities more attractive than debt mutual funds. Report highlights these structural shifts,plus more participation through Systematic Investment Plans (SIPs),should keep Indian capital markets flush with cash .
"The inflows should continue due to tax and policy," the report stated .
Despite poor returns and heavy foreign investor selling in fiscal years 2025,2026,domestic investors stick with mutual funds . Shows bigger shift in household savings toward financial assets. JP Morgan credits supportive policies for this trend.
SIPs now primary shield against market volatility. Report suggests ongoing shift of household savings into financial assets will further boost India's markets,backed by steady policy and rising retail participation.
But challenges loom . JP Morgan warns if monthly SIP inflows fall below ₹250 billion for long,or regulatory changes slash derivatives trading by over 20%,the positive investment outlook could falter.
As things change,how policy and investor actions play out will be key in shaping India's equity investment future…
