RIL, HDFC, Axis Bank, IndiGo, more: List of 12 stocks from Jefferies; shares to gain as FPIs embrace Indian markets
Jefferies Stock Picks: A potential revival in foreign portfolio investor (FPI) flows could put largecap stocks in the spotlight, with companies such as Reliance Industries, HDFC Bank, Axis Bank and Kotak Mahindra Bank emerging as potential beneficiaries.
In a latest report, global brokerage house Jefferies said that it believes largecaps are better placed to attract foreign money because of their higher liquidity and greater FPI ownership, following a prolonged period of overseas investor selling.
The brokerage has identified 12 stocks that could benefit from a reversal in foreign flows: Reliance Industries, HDFC Bank, Axis Bank, Kotak Mahindra Bank, Max Healthcare, JSW Energy, UltraTech Cement, IndiGo, Varun Beverages, Indian Hotels Company (IHCL), DLF and Sona BLW.
"Given higher liquidity and FPI ownership, we see large caps as the more direct beneficiary of revival in FPI flows. We highlight Reliance, HDFC Bank, Axis, Kotak, Max Health, JSW Energy, Ultratech, Indigo, Varun, IHCL, DLF, Sona BLW as plays on FPI reversal," said Jefferies analysts Abhinav Sinha, Priyank Shah and Aditi Singla.
FPI flows into Indian equities have shown signs of turning around after a sustained period of outflows. Foreign investors have recorded net inflows of $8.2 billion since mid-October, including $5.8 billion in just six trading sessions in November 2026.
This marks a potential shift after FPIs recorded cumulative net outflows of $61 billion since September 2024. The first 10 months of 2026 alone saw foreign investors withdraw $31 billion from Indian equities, according to Jefferies.
The brokerage identified several factors that could support a sustained recovery. These include a possible reversal or broadening of the concentrated artificial intelligence (AI) trade, potential equity tax relief, resilient domestic economic conditions, relatively reasonable largecap valuations and light foreign investor positioning in India.
A moderation in the concentrated AI trade could encourage global investors to redirect allocations towards Indian equities. Jefferies pointed to rising hyperscaler bond spreads as a sign of growing questions around AI capital expenditure. It also noted that MSCI Korea had declined around 40% from its June 2026 peak.
Lower crude prices could provide another tailwind. Crude has fallen around 20% from its October 2026 peak, and any further easing of geopolitical tensions could support the decline. As a major oil importer, India could benefit from lower crude prices through improved economic conditions and support for the rupee. Potential equity tax relief could also improve the country's relative appeal.
Domestic indicators have also remained supportive, with healthy festive-season automobile sales, robust power demand and credit growth. These trends have contributed to a 1.5-percentage-point upgrade in MSCI India's earnings estimates since the end of June 2026, Jefferies said.
Jefferies examined three sets of data to identify stocks that could benefit from a reversal in FPI flows: the largest absolute outflows, the sharpest declines in foreign ownership and the biggest reductions in relative positioning against the MSCI India index.
Financials recorded the largest sectoral outflows since September 2024, at $17 billion, followed by Consumer Staples at around $11 billion. Energy, automobiles and IT each saw outflows of approximately $9 billion.
At the stock level, Reliance Industries and HDFC Bank recorded the largest estimated FPI outflows between September 2024 and September 2026, at around $8 billion each. ICICI Bank and Axis Bank followed with $5 billion each, while Mahindra & Mahindra and Kotak Mahindra Bank saw outflows of approximately $3 billion each.
Foreign ownership across BSE 500 companies also declined. FPI ownership fell to a 10-year low of 17.3%, compared with 19.6% in September 2024. Among BSE 500 companies with market capitalisation above $5 billion, Max Healthcare recorded the steepest decline of 17 percentage points, followed by Axis Bank at 13 percentage points. Paytm and 360 ONE WAM saw declines of 12 percentage points each, while Trent and Godrej Consumer Products recorded drops of 11 percentage points each.
In terms of relative positioning against the MSCI India index, HDFC Bank saw the largest reduction, with its relative overweight falling 2.4 percentage points to 1%. Axis Bank's positioning declined 0.4 percentage points, while Kotak Mahindra Bank, Reliance Industries, JSW Energy and BHEL each recorded a decline of around 0.3 percentage points. Industrials and Financials saw the biggest sector-level reductions, at 1.3 percentage points and 1 percentage point, respectively.
Despite the recent inflows, foreign investor positioning in India remains relatively light. Jefferies analysed 70 large active emerging-market funds with combined assets under management of $370 billion and found that their overweight positioning in India stood at just 0.1 percentage point as of September 2026.
That was well below the 10-year average overweight of 2.2 percentage points. As many as 61% of the funds were underweight on India, leaving room for foreign allocations to increase if sentiment improves.
Valuations could also support a return of overseas investors. The Nifty 100 was trading at 18.6 times its one-year forward earnings, around 5% below its 10-year average.
Against this backdrop, Jefferies sees largecap stocks as the more direct beneficiaries of a potential FPI revival. Their higher liquidity and existing foreign ownership could make them easier for overseas funds to add to their portfolios, putting the brokerage's 12 identified stocks in focus if inflows gather pace.
Pranati Deva is a seasoned financial journalist with over a decade of experience in high-pressure newsroom environments, currently working as a Senior Sub Editor at LiveMint. Over the years, she has developed a reputation for sharp editorial judgement, a strong grasp of market dynamics, and the ability to translate complex financial developments into clear, engaging stories for a wide audience. <br><br> Her core areas of coverage include stock markets, leading listed companies, currencies, and commodities, with a particular strength in fast-paced, real-time market reporting. She is known for handling breaking market news, earnings-driven stock movements, and macroeconomic developments with speed, accuracy, and context—qualities that are essential in financial journalism. <br><br> Pranati has built a diverse and credible professional track record across some of India’s most respected news organisations, including MintGenie, CNBC-TV18, Business Standard and EconomicTimes.com. During her stints at these platforms, she produced data-driven market stories, curated and steered live blogs during volatile trading sessions, and conducted interviews with market veterans, fund managers, economists, and industry experts. Her work often combines on-ground reporting with analytical depth, helping readers make sense of daily market fluctuations and longer-term trends. An alumnus of the Symbiosis Institute of Media and Communications and Hansraj College, University of Delhi, Pranati brings a strong academic foundation to her journalism. She specialises in real-time financial reporting, with a keen focus on precision, balance, and insight, aiming to decode market movements in a way that is both informative and accessible to readers across experience levels.
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