Rs 6 lakh crore worth FII outflows since 2024 capital gains tax hike batter Dalal Street. Is a reversal on the cards?
Indian markets moved higher in an institutional flows development.
· Economic Times Markets, ET Stocks
Foreign investors have sold over Rs 6 lakh crore of Indian equities since the 2024 capital gains tax hike, with outflows intensifying in 2026. Finance Minister Nirmala Sitharaman’s comments on LTCG and STT have revived hopes of tax relief, but analysts remain divided on whether any rejig can trigger a sustained FII comeback.
The analysis
This is an Index / institutional flows event. Passive and institutional flows move price independently of fundamentals, and around rebalancing dates they dominate it.
Because the driver here is macro rather than company-specific, the read-through is to index-level positioning rather than to any single name — correlations tend to rise when the whole market faces the same signal.
Why it matters
- Sustained FII or DII direction moves the whole market, not just the names being bought — it sets the tape's tone.
Market context
- A market-wide development: it reaches beyond any single stock.
- Sectors in the story: Capital Goods & Engineering and Capital Markets.
Capital Goods & Engineering
1M -10.9% · 3M -5.3%
Capital Markets
1M -2.9% · 3M -6.3%
Sector moves are the average of the stocks we track in each sector.
In this story
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