New Delhi, Oct. 29 -- A potential reduction in India's equity long-term capital gains (LTCG) tax could improve foreign portfolio investor sentiment, support the rupee and benefit large-cap stocks, particularly financials, according to a report by Jefferies.

The report, noted that discussions around a possible tax cut have gathered pace, although no decision has been announced.

"An equity LTCG cut may similarly help improve FPI sentiment and flows providing support to the INR," Jefferies said.

The brokerage firm noted that capital-account weakness has been a key source of pressure on the rupee, with equity-market-related exits by foreign portfolio investors (FPIs), foreign promoters and foreign private equity investors totalling USD 110...