JP Morgan’s big claim: Tax reforms are affecting the stock market like this, know why Indian investors are standing firm

JP Morgan Indian Equity Report: According to JP Morgan report, due to tax reforms and government policies, the trust of Indian families in the stock market has increased a lot. Despite the selling by foreign investors, the market is strong on the basis of domestic money. A new report by global investment bank JP Morgan has revealed very interesting things about the Indian Stock Market.

According to the report, tax reforms and policy decisions taken by the government in the last few years have made investing in the stock market (equity) in India more attractive than ever. This is the reason that despite not getting very strong returns from the market in the last two years, the money of common Indian families is continuously coming into the stock market and the flow of domestic investment remains strong.

Why is the inclination of the general public increasing towards equity?

JP Morgan has explained in its report that the new changes related to tax on Long-Term Capital Gains (LTCG), debt mutual funds and insurance products have changed the attitude of investors. Now people are shifting their savings from traditional methods towards financial assets i.e. stock market.

At present, long-term capital gains tax of 12.5 percent is levied on investment in the stock market. On the other hand, decisions like slab-rate tax for debt mutual funds, removal of indexation benefits and imposition of tax on the amount received from certain insurance policies have changed the equation. Now people are finding it more beneficial to invest money in equity compared to other places.

Foreign investors retreated, but Indians stood firm

A very surprising figure has emerged in the report. Even when foreign portfolio investors (FPIs) pulled out their money from the Indian stock market and reduced investments during the financial years 2025 and 2026, Indian domestic investors did not panic and remained firmly in the market.

During this period, even though investors got very nominal or low returns from the benchmark index, common retail investors continued their investments through Systematic Investment Plan (SIP). JP Morgan says that this is not a short-term trend, but a major fundamental change in the way Indians invest.

Saving domestic money from global market shocks

Today, this ever-increasing participation of domestic investors has become a protective shield for the Indian stock market. According to JP Morgan, whenever there is a global crisis or foreign funds withdraw money from India, this domestic money handles the huge fluctuations that could have occurred in the market. This money coming through SIP is giving stability to the market.

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JP Morgan’s warning regarding IT sector

On one hand, JP Morgan is very positive about the Indian stock market, on the other hand, it has advised to be a little cautious regarding India’s IT sector. The report believes that the country’s information technology industry may have to face slow growth for a long time in the future.

The biggest reason for this is the rapid changes coming from Artificial Intelligence (AI) and the ongoing geopolitical uncertainty around the world, which is having a direct impact on the new demand. Due to these challenges of technology and business cycle, there may remain uncertainty in the times ahead for IT companies.