RIL, HDFC Bank, Axis, Kotak Bank, VBL and Sona BLW shares among plays on FPI reversal

Jefferies on Tuesday named Reliance Industries Ltd, HDFC Bank Ltd, Axis Bank Ltd, Kotak Mahindra Bank Ltd (KMB), Max Healthcare, JSW Energy, UltraTech Cement Ltd, InterGlobe Aviation Ltd (IndiGo), Varun Beverages Ltd (VBL), Indian Hotels Company (IHCL), DLF and Sona BLW Precision Forgings Ltd as stocks that could benefit from a reversal in FPI flows.

The global investment bank said largecap valuations have turned more reasonable, with the Nifty 100 trading at 18.6 times its estimated one-year forward earnings per share (EPS), 5 per cent below its 10-year average. India offers significantly low beta, Jefferies said. Citing higher liquidity and FPI ownership, it sees large caps as the more direct beneficiary of revival in FPI flows.

"Our analysis of 70 large active EM funds with $370 billion of combined AUM shows India at only 0.1 percentage points overweight as of September 2026, well below the 10-year average of 2.2 percentage points overweight; 61 per cent of funds were underweight India," it noted.

Alongside a decline in neutral weight for India, individual stocks have also seen a hit in their relative positioning against MSCI India between September 2024 and September 2026. HDFC Bank saw the largest reduction, with its relative overweight (OWT) falling 2.4 percentage points to 1.0 percentage point. Axis Bank's positioning fell 0.4 percentage point, while Kotak Bank, Reliance Industries, JSW Energy and BHEL each saw positioning decline by around 0.3 percentage point, Jefferies said.

A moderation or broadening of the concentrated AI trade could help allocations towards India, Jefferies said as it noted that MSCI Korea is already down around 40 per cent from its June 2026 peak and rising hyperscaler bond spreads also point to growing questions over AI capex.

Geopolitical developments remain unpredictable. However, any easing that lowers crude prices (down 20 per cent since the October 2026 peak) would benefit oil-importing India and support the rupee.

Potential equity tax relief could further improve India's relative attractiveness.

Domestic macro indicators remain supportive. Healthy festive auto sales, robust power demand and credit growth have driven a 1.5 percentage point upgrade to MSCI India's earnings estimates since end-June 2026, Jefferies said.

FPI ownership in BSE 500 stocks has fallen to a 10-year low of 17.3 per cent, from 19.6 per cent in September 2024.

Jefferies screened BSE 500 stocks with market capitalisation above $5 billion for the sharpest decline in FPI ownership between September 2024 and September 2026. Max Healthcare saw the steepest reduction 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 (GCPL) witnessed a fall of 11 percentage points each.