Jefferies Names 11 Indian Stocks Set to Gain as FPIs Pour In $8.2B
Foreign investors pumped $8.2B into Indian equities since mid-October, including $5.8B in November. Jefferies highlights 11 large-caps led by Reliance and HDFC Bank.
Key Takeaways
- Foreign portfolio investors (FPIs) have reversed course with $8.2 billion in net inflows since mid-October—including $5.8 billion in six November sessions—after pulling $61 billion since September 2024.
- Jefferies' ownership screens favor heavily sold large-caps with deep liquidity, led by Financials ($17 billion prior outflows) and energy bellwether Reliance Industries.
- Sustaining the rally hinges on US Treasury yields stabilizing and domestic earnings holding up; rapid November inflows also raise near-term profit-taking risk.
Foreign institutional investors have staged a sharp reversal in Indian equities, injecting 5.8 billion across just six trading sessions in November—according to a new Jefferies strategy report. The sudden shift follows a prolonged exit in which foreign portfolio investors (FPIs) pulled roughly $61 billion from Indian shares since September 2024.
What Happened
- Aggressive flow reversal: In its report titled "Where Could a Revival in FPI Flows Go?", Jefferies noted that global funds rotated back into India amid lighter foreign positioning, global AI-trade reassessment, and expectations of potential equity tax relief.
- Financials bore the brunt: Financials suffered the steepest sectoral selling during the prior downturn, logging $17 billion in cumulative FPI outflows since September 2024.
- Bellwether outflows: At the stock level, Reliance Industries and HDFC Bank absorbed roughly 5 billion exit alongside an estimated 13-percentage-point drop in foreign ownership.
- 11-stock screen: Jefferies screened for companies combining sharp foreign ownership reductions with high institutional liquidity, naming Reliance Industries, HDFC Bank, Axis Bank, Kotak Mahindra Bank, Max Healthcare, JSW Energy, UltraTech Cement, IndiGo (InterGlobe Aviation), Varun Beverages, Indian Hotels Company (IHCL), DLF, and Sona BLW Precision Forgings.
Jefferies Ownership Rebound Screen
| Stock / Sector | Estimated Prior FPI Outflow | Key Positioning Driver |
|---|---|---|
| Financials (Sector) | ~$17 billion | Steepest sectoral underweight since Sept 2024 |
| Reliance Industries | ~$8 billion | Heavyweight liquidity proxy for returning FPIs |
| HDFC Bank | ~$8 billion | Largest relative FPI positioning cut among top weights |
| Axis Bank | ~$5 billion | Foreign ownership fell ~13 percentage points |
Context & Market Mechanics
- Why large-caps lead first: Returning global funds typically deploy capital into index heavyweights with deep daily turnover before moving down the market-cap curve. Because domestic institutions absorbed much of the $61 billion foreign exit over the past two years, foreign positioning in Indian mega-caps sits near multi-year lows relative to MSCI India benchmarks.
Independent Analysis & Key Risks
- Strategic implication: If FPI inflows persist through year-end, under-owned private banks and index heavyweights have room for valuation re-rating simply from benchmark catch-up buying.
- Global rate risk: With US 10-year Treasury yields hovering near 5%, any renewed spike in US inflation or Federal Reserve hawkishness could quickly cool emerging-market risk appetite.
- Valuation & earnings test: Domestic mid-caps still trade at rich multiples, and if Q3 FY27 corporate earnings disappoint or crude oil rebounds, foreign funds could pause or book quick profits on the $5.8 billion November surge.
Disclaimer: This report is for informational purposes only and does not constitute investment advice.
Sources & References
- View sourceEconomic TimesNews Report
FIIs are back! Jefferies lists 11 stocks that can be the biggest beneficiaries
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