Sivakumar said the focus within financials is shifting beyond banks, with capital market businesses and AMCs emerging as important areas given their strong growth prospects.
“Other than banks, if you look at capital markets, AMCs, growth continues to be really, really strong, and we continue to remain invested in some of those names. The financials will continue to be an important part of the overall allocation.”
For banks, Sivakumar said loan growth remains strong and credit quality has so far remained stable. Margins, however, remain an important factor to watch. He said improving margins could potentially lead to a rerating in bank stocks.
The fund house has historically been underweight on banks, partly due to concerns around growth and sustained foreign investor selling. However, Sivakumar said it has started gradually increasing exposure as its view on the overall cycle improves.
On the debate around monetisation of UPI transactions through merchant discount rates (MDR), Sivakumar said banks are likely to capture the largest share of the benefit.
He said some form of monetisation could help payment companies recover part of the cost of running the payments infrastructure, although banks are likely to remain the biggest beneficiaries.
On metals, Sivakumar said Axis Asset Management remains underweight on the sector but continues to identify opportunities in select companies.He said the fund house does not take a broad sectoral view on metals as individual commodities and companies can have very different outlooks. The approach, therefore, remains focused on identifying specific companies that are performing well rather than making an overall bet on the sector.
Global macroeconomic headwinds, including the US Federal Reserve raising interest rates, reflect stronger economic conviction rather than an inherent negative for equities.
Although near-term volatility is likely as investors rebalance portfolios towards US bonds, long-term corporate earnings remain intact.
Corporate profits are not expected to suffer significantly over the next four quarters even if oil prices hover around the $100 mark for another quarter. Markets are currently pricing in earnings trajectories for financial years 2028 and 2029, minimising the long-term impact of crude fluctuations.
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