HDFC Securities CEO Dhiraj Relli Backs SEBI LTCG Tax Scrap Plan

SEBI proposal to scrap LTCG tax for foreign funds positive for markets: HDFC Securities CEO

By By Saurav Mukherjee, Mumbai, November 3

Speaking exclusively to ANI, Relli said the proposal by the Securities and Exchange Board of India (SEBI) to remove LTCG tax for foreign funds is among the key demands of overseas investors.

"That's where they want long-term capital gains taxes to be abolished, and that's something they have been looking forward to and demanding," he observed.

He said that although the final decision on taxation rests with the Government of India, positive signals from the Finance Minister indicate a willingness to address investor concerns.

Relli described the move as "a very good thing and step in right direction," adding, "I believe that this is positive for the markets at large."

Foreign investors have withdrawn around Rs 3.07 lakh crore from Indian equities in 2026, raising concerns about the attractiveness of domestic markets amid global uncertainties.

Relli said changes in taxation would not directly influence India's GDP growth, which depends on domestic demand, public investment and economic activity across manufacturing and services.

"Taxations will not directly impact the GDP growth," he noted, explaining that "GDP growth will be dependent on the domestic demand, investment by public in the public capex, and also the manufacturing and services activity at the ground."

However, he said reducing LTCG tax could improve market sentiment and help check foreign investor selling.

He said such a move could "arrest the outflows by foreign portfolio investors who've been relentlessly selling in Indian markets because they find Indian market less attractive when it comes to the dollar returns."

On the revival of private investment, Relli said strong festive demand and record GST collections of Rs 2.3 lakh crore should not be seen as conclusive evidence of a sustained recovery in private capital expenditure.

"Private capex is dependent on the sustained demand and not just about the festive," he stated.

He said the government has been supporting investment through public capital expenditure, but private businesses need a stable policy environment and sustained demand to increase investments.

"government have been playing its role by doing the all heavy lifting in the public capex," he said, adding that private investment would require "a stable sustained taxation, regulatory environment, and decisive demand."

He further stressed the importance of policy consistency, saying businesses need to be confident about the taxation framework and "ring fencing their interest by not tweaking with the taxation more often" to revive the "animal spirit in the Indian entrepreneurs."

On investment strategies amid market volatility, Relli advised retail investors and high-net-worth individuals (HNIs) to follow a disciplined asset allocation strategy instead of reacting to short-term market movements.

"Retail investors or HNIs need to anchor their asset allocation," he advised. "They should clearly know their asset allocation and work on the same, and asset allocation rebalancing should be done as a process, as a discipline, and not as a knee-jerk reaction or to timing the market."

He also recommended a higher allocation to large-cap stocks, citing relatively attractive valuations compared with mid- and small-cap stocks.

"I think 70% of the equity allocation should be on large caps, and only 20 to 30% of the allocation should be in mid and small cap because the valuation comfort is more in the large cap then mid and small cap," he explained.

Among sectors, Relli identified private sector banks, capital market-related stocks, automobiles and auto ancillaries, and consumer discretionary as areas offering investment opportunities. He noted that financial stocks, particularly private sector banks, have underperformed over the past two to two-and-a-half years.

He also maintained a positive outlook on consumer discretionary, noting that one favourable monsoon would not fundamentally alter the sector's long-term demand prospects.

On the near-term market outlook, Relli said volatility is likely to continue until there is greater clarity on the global macroeconomic environment.

However, he said India's domestic economic fundamentals remain strong and expressed greater optimism about the market outlook for FY28 and FY29.

— ANI