India’s equity market has returned to the world’s five largest stock markets after its total market capitalisation reached approximately $5.4 trillion, supported by a strong recovery in benchmark indices and renewed foreign investor buying. The improvement in market sentiment comes as the government reviews proposals to reduce taxes on equity investments ahead of the Union Budget 2027–28.
According to Bloomberg, India’s market capitalisation has overtaken Taiwan’s, restoring its position among the five largest global equity markets. The Nifty 50 has gained nearly 14% from its October 8 low and reached an eight-month high after nine consecutive sessions of gains.
Foreign Investors Return to Indian Equities
Foreign investors purchased approximately $6.43 billion worth of Indian equities in November, the highest monthly inflow since September 2024, according to Reuters. The return of overseas buying has supported the market recovery after a period of significant foreign outflows.
Domestic institutional investors, however, have taken the opposite position. DIIs sold ₹8,434 crore on Wednesday, marking their ninth consecutive session of net selling. The divergence between foreign and domestic flows has become an important feature of the latest market rally.
Falling crude oil prices have also supported sentiment. Brent crude declined below $92 per barrel amid hopes of progress in international peace talks. However, investors remain concerned about inflation and the possibility of another Reserve Bank of India rate increase.
Budget 2027 Tax Proposals Under Review
The government is reviewing proposals concerning Long-Term Capital Gains tax and Securities Transaction Tax ahead of the next Union Budget. Finance Minister Nirmala Sitharaman has reportedly indicated that the government is open to hearing investor concerns, although no changes have been approved.
SEBI has reportedly recommended exempting Foreign Portfolio Investors from the 12.5% LTCG tax to improve India’s competitiveness in attracting overseas capital. Industry bodies, including PHDCCI and FICCI, have proposed changes such as reducing or abolishing LTCG tax, lowering Short-Term Capital Gains tax and cutting STT rates.
ASSOCHAM has proposed a tiered LTCG structure, including a lower tax rate for longer holding periods. Another proposal under discussion would allow foreign investors to calculate capital gains in US dollars rather than rupees, reducing the impact of currency depreciation on taxable returns.
SBI Research estimates that abolishing LTCG tax could cost the government approximately ₹40,000 crore to ₹50,000 crore in FY28. Possible alternatives include increasing the annual LTCG exemption limit or adjusting STT rates to offset some of the revenue loss.
Meanwhile, India’s net direct tax collections rose 11.76% year-on-year to ₹14.42 lakh crore between April 1 and November 10, 2026. Net corporate tax collections increased 17.84% to ₹6.32 lakh crore, while net non-corporate tax collections rose 5.3% to ₹7.56 lakh crore. Securities Transaction Tax collections increased 51.56% to ₹54,078 crore.
The government has set a full-year FY27 direct tax collection target of ₹26.97 lakh crore. The rise in STT collections and the proposals to reduce equity taxes highlight the challenge of balancing market competitiveness, investor participation and government revenue.
What is India’s current stock market capitalisation?
India’s total equity market capitalisation reached approximately $5.4 trillion, according to the reported November 2026 data.
How much have foreign investors bought in November?
Foreign investors purchased approximately $6.43 billion worth of Indian equities during November, according to Reuters.
Is the government abolishing LTCG tax?
No. The government is reviewing proposals, but no changes have been approved. Existing tax rules remain applicable.
How much did India’s net direct tax collections increase?
Net direct tax collections rose 11.76% year-on-year to ₹14.42 lakh crore between April 1 and November 10, 2026.
