$HDFCBANK

### India Approves Major Tax Relief for Foreign Investors in Government Securities The Indian government has approved a significant tax relief measure for foreign portfolio investors (FPIs) investing in Government Securities (G-Secs). The Cabinet has cleared the removal of capital gains tax on FPI investments in G-Secs, while discussions are also underway to eliminate the existing 20% withholding tax on interest income from these securities. The move is aimed at attracting higher foreign capital inflows into India’s bond market, especially at a time when the country is facing pressure from rising crude oil prices, rupee volatility, and continued foreign institutional investor (FII) outflows from equities. The decision is also expected to strengthen India’s attractiveness after its inclusion in major global bond indices. ### Likely Impact on Stocks & Sectors 🔹 **Banking Stocks** are expected to benefit the most as higher bond inflows could improve liquidity conditions and support treasury gains. Key beneficiaries may include HDFC Bank, ICICI Bank, SBI, Axis Bank, and Kotak Mahindra Bank. 🔹 **NBFCs & Housing Finance Companies** could also gain due to lower borrowing costs and improved debt market liquidity. Stocks like Bajaj Finance, REC, PFC, and LIC Housing Finance may remain in focus. 🔹 **Capital Market & Exchange-Linked Stocks** such as BSE, MCX, and CDSL may benefit from higher debt market participation and increased financial activity. 🔹 **Infrastructure & Power Companies** including L&T, NTPC, Power Grid, and Adani Ports could see positive sentiment if bond yields soften and financing costs decline. ### Overall Market View The policy is considered a strong positive for India’s financial markets and bond ecosystem. Increased foreign participation in Government Securities may support rupee stability, improve liquidity, and enhance investor confidence across banking, financial, and infrastructure sectors.