Open Market Buybacks Return: What SEBI's Aug 1 Rule Means

Open Market Buybacks Are Back, and the Stakes Are High SEBI's June 2026 board approval to reinstate open market buybacks via stock exchanges is one of the more meaningful capital allocation developments for Indian listed companies in recent years. Starting August 1, 2026, companies can repurchase shares directly through the exchange mechanism, a route that was discontinued in 2024 after concerns around price manipulation and disclosure gaps. The new framework tightens the rules considerably: a 66-working-day completion window and a mandatory 40% utilisation threshold in the first half of the buyback period. That second condition is the important one. It kills the old practice of announcing large buybacks and quietly letting them lapse. You can't announce a ₹5,000 crore buyback and use ₹400 crore of it anymore. For shareholders sitting on companies with bloated cash reserves and limited capex pipelines, this is worth paying attention to. The structure forces conviction. And with Q1FY27 results season approaching, boards holding excess liquidity will face pointed questions from institutional investors. Open market buybacks give them a credible, tax-efficient answer. IT Sector: The Most Obvious Beneficiaries Look at the balance sheets first. [Infosys](/stock/INFY) (NSE: INFY) had ₹35,400 crore in cash and equivalents as of March 2026. [TCS](/stock/TCS) (NSE: TCS) consistently generates free cash flow north of ₹40,000 crore annually and has returned capital aggressively through special dividends and buybacks since 2017. [HCL Technologies](/stock/HCLTECH) (NSE: HCLTECH) and [Wipro](/stock/WIPRO) (NSE: WIPRO) both carry net-cash positions that dwarf their near-term investment requirements. The IT sector's buyback history is well-established. TCS alone has completed five buybacks since 2017, totalling over ₹1.6 lakh crore in aggregate. The open market route, when it was last available, offered price flexibility that the tender offer route doesn't. Companies can buy a...