- Foreign portfolio investors have withdrawn nearly $61 billion from Indian equities since Sept 2024
- FPIs have returned with $8.2 billion inflows since mid-Oct 2026, including $5.8 billion in Nov
- Jefferies identifies Reliance, HDFC Bank, Axis Bank, Kotak Mahindra among top beneficiaries
After pulling nearly $61 billion out of Indian equities since September 2024, foreign portfolio investors (FPIs) are showing signs of returning. Jefferies believes the reversal may have more legs, with Reliance Industries, HDFC Bank, Axis Bank and Kotak Mahindra Bank among the stocks that are likely to benefit from a revival in overseas flows.
In a report titled Where Could a Revival in FPI Flows Go?, Jefferies analysts Abhinav Sinha, Priyank Shah and Aditi Singla said FPIs have brought in $8.2 billion since mid-October 2026, including $5.8 billion in just six trading sessions in November.
The brokerage sees several factors supporting a potentially durable revival in foreign flows, including reasonable large-cap valuations, light investor positioning, resilient domestic fundamentals and the possibility of equity tax relief.
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Jefferies' 12 Stocks To Watch As FPI Flows Return
Jefferies picked Reliance Industries, HDFC Bank, Axis Bank, Kotak Mahindra Bank, Max Healthcare, JSW Energy, UltraTech Cement, IndiGo, Varun Beverages, Indian Hotels, DLF and Sona BLW as potential beneficiaries of an FPI reversal.
The brokerage ran three screens to identify stocks where foreign ownership and positioning have fallen sharply.
Financials have seen the largest sectoral FPI outflows since September 2024, at $17 billion, followed by consumer staples at around $11 billion. At the stock level, Reliance Industries and HDFC Bank saw estimated outflows of around $8 billion each, followed by ICICI Bank and Axis Bank at $5 billion each.
FPI ownership in BSE 500 companies has fallen to a decade low of 17.3%, from 19.6% in September 2024, analysts said. Max Healthcare recorded the steepest decline in ownership at 17 percentage points, followed by Axis Bank at 13 percentage points.
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HDFC Bank also saw the biggest reduction in relative foreign positioning, with its overweight position falling 2.4 percentage points to an underweight of 0.3%.
Why Jefferies Sees More Room For Foreign Inflows
Foreign investor positioning remains unusually light. Jefferies' analysis of 70 large active emerging-market funds, with combined assets under management of $370 billion, showed India at just 0.1 percentage point overweight as of September 2026, against a 10-year average of 2.2 percentage points. As many as 61% of the funds were underweight India.
The brokerage believes a moderation or broadening of the concentrated AI trade could redirect allocations towards India. It also flagged the possibility of lower crude prices amid geopolitical easing and potential equity tax relief as additional triggers.
Valuations offer another support. The Nifty 100 trades at 18.6 times one-year forward earnings, around 5% below its 10-year average.
"Large caps could be the cleaner play on an FPI return," Jefferies said, citing their higher liquidity and foreign ownership. The brokerage also noted that India's relatively low beta could make large-cap stocks a more direct beneficiary if overseas flows gather pace.
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