Mr. Shreyash Devalkar

Head - Equity, Axis Mutual Fund

With a rich experience of over two decades in the equity markets, Shreyash Devalkar is the Head – Equity at Axis AMC. He joined in 2016 as a Fund Manager and was elevated to the role in 2023. He manages some of the flagship funds at Axis AMC such as the Axis Bluechip Fund, Axis Midcap Fund, Axis ELSS Tax Saver Fund, Axis Growth Opportunities Fund, and a few more.

Prior to joining Axis AMC, he was associated with BNP Paribas AMC as a Fund Manager for more than 5 years. He has also worked as a Research Analyst at IDFC Asset Management Company (July 2008 to Jan 2011) and IDFC Securities (Sept 2005 to July 2008).

Qualification:- Chemical Engineering from UDCT, MMS Finance from JBIMS

Q1. How do you interpret the current domestic macro tailwinds in the context of ongoing global uncertainties? In your view, how is the market navigating and balancing these contrasting forces?

Ans:- In the last 3-4 months, we have witnessed markets post a sharp recovery with returns ranging above 18%-25%. FIIs returning to equities, consistent inflows from DIIs, relatively attractive valuations were the key reasons for the surge in equities. The triggers going ahead will be how the tariff scenario unfolds for India on relative basis compared to competing countries in respective goods and the ongoing earnings season. If we look at the macro factors, we stand supported by surplus liquidity and lower interest rates, our twin deficits are in control, inflation is well below RBI’s target and growth seems reasonable. Stability in currency and low inflation may offer some room for further rate cut.

Q2. With the June quarter earnings season now underway, how do you assess the performance outlook for India Inc. this quarter?

Ans:- We believe that this quarter could be in line with expectations, because earnings expectation are already cut across. Overall, the growth is still expected to be in single digits. At a sector level, banks may face a drag from NIMS given falling interest rates, automobile sector is expected to stay subdued while the pharma segment could report decent growth. Consumption companies have been a pain point however going forward this could improve if consumption rebounds. Industrials and manufacturing could do better than market expectations.

Q3. Foreign institutional investors haven’t fully returned to Indian markets yet - in your view, is it valuations or earnings that are holding them back?

Ans:- It’s a combination of two things. Higher valuations led to FIIs moving back and returning when valuations turned better, and interest rate differential compared to US. Although not out of the woods, earnings selectively may turn out to be better than expected. We believe markets are in a phase where we could see some fair amount of volatility and push and pullback from the FIIs.

Q4. We've seen a surge in new products, categories, and investment avenues. Has this led to a ‘problem of plenty’ for investors? And could passive investing offer a way to simplify decision-making?

Ans:- We believe that different investors have different choices, some choose active funds for the alpha, while other may want to just invest in passive funds for their simplicity. As markets mature, new opportunities arise and I believe investors should explore new avenues of investing. Spreading assets across products, categories and avenues can provide investors an immense wealth creation journey.

Q5. How should investors position themselves in the small and mid-cap segment? Are we seeing a meaningful improvement in profitability relative to large caps based on current data?

Ans:- Although large-cap stocks have gained favor in recent months following the sharp correction, I always believe in being invested across the market capitalisation. Many large-cap companies have shown relatively modest growth in the current cycle, making their valuations more reasonable compared to pre-COVID levels. On the other hand, sectors such as defense, power capex, tourism, and EMS are experiencing strong growth, but valuations in these areas are quite elevated. These themes are more prominently represented in mid- and small-cap segments. Therefore, it’s advisable for investors to stay invested across the market cap spectrum. However, stock selection remains critical-simply allocating across asset classes may not be enough to generate superior returns.

Q6. As a fund manager, how do you determine the right time to exit a sector-especially when it remains in favour but the fundamentals appear to be weakening?

Ans:- When fundamentals are weakening on relative basis - both in the context of valuations and compared to other sectors, it is generally time to reduce exposure, we follow this principal across market cycles.

Please note we have published the answers as it is received from the Fund Manager of Axis.