Suryaa Business Desk: HDFC Bank and ICICI Bank, two leading private banking institutions in India, hold a significant portion of their shares with foreign portfolio investors (FPIs). Market analysts estimate that if the anticipated reduction in Long Term Capital Gains (LTCG) tax is implemented, these two banks would be the primary beneficiaries. This decision could act as a catalyst for the resurgence of foreign fund inflows into the Indian equity market.
According to data, FPIs hold over 53 percent of HDFC Bank, while their stake in ICICI Bank ranges between 46 and 47 percent. Both institutions carry a substantial weightage in the Nifty and Sensex indices. With foreign investors recently withdrawing capital from Indian markets due to the burden of high capital gains taxes, a reduction in LTCG could encourage foreign institutional investors to increase their focus on banking stocks.
Brokerage firms analyze that any reduction in LTCG tax rates would significantly increase post-tax returns for global funds. Given their strong capital, asset quality, and consistent loan growth, HDFC and ICICI Bank are positioned to potentially see increased market performance with the arrival of foreign funds. Financial experts believe this development could strengthen the sentiment for the entire Indian market, beyond just the banking sector.