SEBI Buyback Rule: What Changes on August 1

SEBI Buyback Route Returns: What Actually Changed SEBI's decision to reinstate open market buybacks through stock exchanges, effective August 1, 2026, is a structural shift worth understanding carefully. The regulator had earlier restricted this route in 2024, citing concerns about price manipulation and inadequate disclosure. Its return — alongside the existing tender offer and book-building routes — signals that SEBI believes the framework is now tighter and the mechanism can work without distorting price discovery. The mechanics matter here. Under the open market buyback route, companies can purchase their own shares directly from the secondary market over a defined window, typically up to 15% of paid-up capital and free reserves without shareholder approval, and up to 25% with it. Unlike tender offers, which require a fixed price and a specific window, open market purchases allow companies to buy opportunistically when prices dip. That flexibility is what makes this route particularly powerful for companies with large cash piles and conviction in their own valuations. This isn't a small tweak. It changes the calculus for how India's most cash-generative businesses think about capital allocation — and it shifts the lens for equity investors too. Which Sectors and Stocks Come Into Focus The immediate candidates are companies with high free cash flow, low debt, and surplus reserves sitting idle. Indian IT fits that profile almost perfectly. [TCS](/stock/TCS) (NSE: TCS) had cash and cash equivalents of approximately ₹58,000 crore as of March 2025 and has historically returned capital through buybacks — executing five of them between 2017 and 2023, totaling over ₹1.6 lakh crore. With that precedent and the open market route now back, TCS is the single most obvious candidate to watch. [Infosys](/stock/INFY) (NSE: INFY) and [HCL Technologies](/stock/HCLTECH) (NSE: HCLTECH) are similarly positioned. Infosys carries a capital return policy that targets 85% of free ...