US-based investment management giant Capital Group has significantly increased its exposure to Adani Group companies while sharply reducing its holdings in Reliance Industries Ltd (RIL), according to a Bloomberg report citing people familiar with the matter. The development marks a notable reallocation among foreign institutional investors in India's two largest conglomerates.

Key Investments in Adani Group

Capital Group has reportedly acquired stakes worth over $2 billion across three Adani Group companies — Adani Ports and Special Economic Zone Ltd, Adani Power, and Adani Green Energy. On 5 May, the firm purchased nearly a 2 per cent stake in Adani Ports for ₹74.86 billion ($776 million) through open-market transactions, according to BSE block-deal data cited in the report.

Neither Capital Group nor Adani Group immediately responded to requests for comment. A Capital Group spokesperson was quoted as saying she was 'unable to comment on individual stocks or shareholdings.'

What the Adani Pivot Signals

According to the Bloomberg report, the 'pivot toward Adani stocks in particular' signals a recovery in investor confidence following months of regulatory scrutiny and market volatility around the conglomerate. This comes after the US decision to drop charges against Adani Enterprises Ltd — a development that analysts have described as a 'huge victory' for the group. Experts have noted that the move is expected to strengthen investor confidence and open pathways for the conglomerate to continue raising global capital.

Notably, Capital Group's renewed appetite for Adani Group stocks represents one of the most visible foreign institutional endorsements since the scrutiny period, and could influence other global funds reassessing their India allocations.

Reliance Holdings Shrink Sharply

In contrast, Capital Group's exposure to Reliance Industries has 'declined sharply over the past several years,' according to the Bloomberg report. The firm reportedly held approximately 142 million shares in Reliance Industries at the latest count, down from around 500 million shares six years earlier and a peak of 755 million shares in March 2017, according to data compiled by Bloomberg. Reliance Industries shares have declined 8.36 per cent over the past one year, the report noted.

Broader Context for Foreign Investors

The reallocation reflects a broader reassessment underway among foreign institutional investors in Indian equities. Adani Group's recovery from its post-Hindenburg Research report lows has been gradual but steady, aided by legal developments in the US and continued infrastructure expansion domestically. Reliance, meanwhile, has faced headwinds from its telecom and retail segments, contributing to the stock's underperformance over the past year.

As Capital Group's move becomes more widely known, market observers will be watching whether other large foreign funds follow suit — a trend that could meaningfully shift the FII composition in India's infrastructure and energy sectors.