From 34% CAGR to -4.2%: How Sensex Fared Under Different Capital Gains Tax Regimes
· Business · Moneycontrol
The Sensex has experienced starkly contrasting performance trajectories across various capital gains tax regimes implemented over the decades. Historical market data shows that annualized returns for the benchmark index ranged from a robust 34% compound annual growth rate during certain phases to a contraction of -4.2% in others. Tax policy shifts, including changes to long-term and short-term capital gains rates, directly influenced institutional and retail investor sentiment and capital flows. While taxation is a key factor in portfolio returns, broader macroeconomic conditions, corporate earnings, and global liquidity played equally critical roles in driving market momentum. The analysis illustrates how past legislative adjustments coincided with major bull and bear cycles in Indian equity markets.
Why it matters
Retail investors and mutual fund participants must understand how tax regime shifts historically impact equity returns and portfolio valuations. Changes to capital gains structures directly alter post-tax yields for domestic and foreign investors navigating the Indian stock market.
Read the original report — Moneycontrol
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