UBS says LTCG tax cut may not bring flood of foreign inflows
In short
UBS says a cut in long-term capital gains tax may improve market mood, but it may not bring back a lot of foreign money to India. The report says India still trades at a higher valuation than many emerging markets, even if that gap has narrowed.
UBS also said earnings growth is only middle of the pack and global liquidity still matters a lot. A tax cut alone may not be enough, but the exact flow impact is unknown.
What the reporting says
UBS says a long-term capital gains tax cut may lift sentiment, but is unlikely to bring a flood of foreign inflows into India, according to the publisher summary. Sunil Tirumalai said India’s valuation premium over emerging markets has narrowed but remains above pre-Covid levels, while earnings growth is in the middle of the pack and global liquidity still drives flows. The market may get a near-term boost, but the size of foreign inflows is uncertain.
Why it matters
UBS Global Research, through Sunil Tirumalai, said an LTCG tax cut could improve sentiment but may not be enough to restore strong foreign inflows into India. The summary says India’s valuation premium over emerging markets has narrowed, yet remains above pre-Covid levels, while earnings growth is only mid-pack and global liquidity remains key. That suggests sentiment support without a guaranteed capital flow response, but no specific policy change or inflow estimate was provided.