Open Market Buybacks Return Aug 1: Large-Caps in Focus

Open Market Buybacks Are Back: What SEBI's August 1 Rule Means SEBI has cleared the return of open market share buybacks via stock exchanges, effective August 1, 2026. The mechanism was shelved in 2024 when SEBI tightened buyback norms and pushed companies toward the tender offer route. Its reinstatement gives listed companies a direct, price-sensitive channel to repurchase shares. For cash-heavy large-caps sitting on underutilized balance sheets, the timing is pointed. The structure matters. Companies get 66 working days to complete a buyback program, with a hard requirement to deploy at least 40% of the earmarked corpus in the first half of that window. That front-loading clause is deliberate. It prevents companies from announcing buybacks as optics and dragging execution. It also means short-term price support is structurally more credible now than it was under older frameworks. This isn't a minor procedural update. Open market buybacks give management teams flexibility that tender offers don't: they can buy when prices dip, pause when they rise, and operate without fixing a single price band. For shareholders, that price sensitivity can translate into a natural floor during broader market selloffs. IT Sector Carries the Heaviest Ammunition The Indian IT sector is the most obvious beneficiary here. [Infosys](/stock/INFY) (NSE: INFY) had cash and equivalents of approximately ₹34,400 crore as of March 2025, while [TCS](/stock/TCS) (NSE: TCS) has historically maintained a payout ratio above 80%, including buybacks, but the tender route limits execution flexibility. With open market programs back, TCS management has a cleaner mechanism to absorb float during weakness. HCLTECH (NSE: HCLTECH) and WIPRO (NSE: WIPRO) also carry net cash positions and have both executed buybacks in prior cycles. FairStock Scores above 70 in the IT space, currently applicable to INFY and TCS, tend to correlate with precisely this profile: strong free cash flow generation, low capex i...