Shreyash Devalkar, Head of Equity at Axis Mutual Fund, which manages over $39 billion in assets, said the Indian equity market is at a stage where most investment themes are already identified, making valuations a key challenge for investors. In this environment, he is focusing on a mix of steady growth and stocks offering growth at a reasonable price (GARP).Speaking on current market conditions, Devalkar said that even though companies are delivering growth, fewer stocks are making new highs. He added that high valuations are changing market behaviour. “The market seems more inclined to punish stocks for one bad quarter,” he said.Focus on growth continuity and GARP ideas
Devalkar said maintaining growth consistency is important when investing at higher valuations. “We are trying to focus both on continuity of growth numbers,” he said, while also tracking stocks that offer growth at reasonable valuations.Also Read | Motilal Oswal downgrades ITC, positive on Devyani International–Sapphire mergerHe identified turnaround stories as one area where such opportunities may emerge. He pointed to the commercial vehicles (CV) segment in the auto sector, where recent data suggests an improvement that may not yet be fully reflected in stock prices.Sector valuations: banks, IT, autos in focusOn valuations, Devalkar noted that some sectors are still trading close to pre-COVID levels. These include banks and lenders, Information Technology (IT), consumer discretionary, and automobile original equipment manufacturers (OEMs).In contrast, he said capital goods and construction have seen a sharp rise in valuations. “The focus is on finding out companies where a turnaround is happening,” he said, adding that this trend has been visible in the banking and lending space over the past six months.Events and trends to trackLooking ahead, Devalkar highlighted several factors that could influence markets. These include the continuation of consumption seen during the festive season, particularly in autos, and policy signals from the Union Budget, especially around equity taxation.Also Read | From pharmaceuticals to software and healthcare, where S Naren sees opportunity nowHe also said progress on the India-EU trade agreement, developments in India-US relations, and domestic state elections will remain important for market sentiment.QSR and consumption dynamicsCommenting on the consumption space, Devalkar said same-store sales growth (SSSG) remains a challenge for quick service restaurant (QSR) companies. He noted that food delivery, quick commerce, and organised retail are reshaping consumer behaviour.He added that unlike fast-moving consumer goods (FMCG), QSR growth requires ongoing capital expenditure due to new store additions, making both expansion and SSSG key factors to monitor.Rupee and inflation outlookOn the macro front, Devalkar said the Indian rupee has adjusted from earlier overvalued levels. He flagged inflation as the main variable to watch, driven by global commodity prices. However, he said crude oil prices remain manageable, which offers some support to the inflation outlook.For the full interview, watch the accompanying videoCatch all the latest updates from the stock market here
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