Jefferies forecasts large-cap gains as foreign portfolio inflows revive
Jefferies expects a rebound in foreign portfolio investor (FPI) flows to lift Indian large-cap stocks, naming 12 companies that could benefit, including Reliance Industries and HDFC Bank.
Jefferies analysts say a reversal in foreign portfolio investor (FPI) activity could boost Indian large-cap equities, which have higher liquidity and greater FPI ownership. The brokerage highlighted Reliance Industries, HDFC Bank, Axis Bank, Kotak Mahindra Bank, Max Healthcare, JSW Energy, UltraTech Cement, IndiGo, Varun Beverages, Indian Hotels Company, DLF and Sona BLW as potential beneficiaries.
The report notes that FPIs have recorded net inflows of $8.2 billion since mid-October, with $5.8 billion entering during six trading sessions in November 2026, after a period of sustained outflows that totaled $61 billion since September 2024.
"Given higher liquidity and FPI ownership, we see large caps as the more direct beneficiary of revival in FPI flows," said Abhinav Sinha, Priyank Shah and Aditi Singla of Jefferies.
Jefferies cites several factors that could sustain the inflow rebound, such as a possible moderation of the concentrated artificial-intelligence trade, potential equity-tax relief, resilient domestic macro conditions, relatively reasonable large-cap valuations and light foreign-investor positioning. The analysts also point to lower crude-oil prices, which could support India’s economy and the rupee.
On the sectoral level, financials experienced the largest FPI outflows ($17 billion), followed by consumer staples ($11 billion). At the stock level, Reliance Industries and HDFC Bank each saw estimated outflows of about $8 billion between September 2024 and September 2026.
FPI ownership across BSE 500 stocks fell to a 10-year low of 17.3%, down from 19.6% in September 2024. Max Healthcare recorded the steepest ownership decline, dropping 17 percentage points, while Axis Bank fell 13 points.
Despite the recent inflow, overall foreign-investor positioning remains light. An analysis of 70 large emerging-market funds showed India with an overweight of just 0.1 percentage point in September 2026, far below the 10-year average of 2.2 points, and 61 % of the funds were underweight on India.
Jefferies also notes that large-cap valuations have become more attractive, with the Nifty 100 trading at 18.6 times forward earnings, roughly 5 % below its 10-year average.