Tax, policy changes making equities more attractive for investors, likely to sustain inflows: JP Morgan

JP Morgan's equity research report said government policy measures and tax changes have made equities more attractive relative to other investment options, supporting sustained inflows into Indian capital markets. The report highlighted that equity is taxed at 12.5 percent LTCG, and the removal of indexation, taxation of insurance policy proceeds, and slab-rate taxation for debt mutual funds improves equity's relative appeal. JP Morgan noted that SIPs have emerged as the dominant source of equity fund inflows, cushioning domestic markets against FPI selling in FY25 and FY26, though it cautioned that the investment thesis would weaken if monthly SIP inflows fall below around 250 billion rupees for a sustained period or if derivatives trading volumes decline more than 20 percent.