Banks, FMCG still offer value in this pricey market: Axis AMC's equity head

"At Axis, quality is the bedrock of everything," emphasises Shreyash Devalkar, Head - Equity at Axis Mutual Fund. Having joined Axis AMC in 2016 as a fund manager, he has been steering the equity division since 2023. He currently oversees flagship funds, including Axis Bluechip, Midcap, Tax Saver, and Growth Opportunities, with total assets worth over Rs 1.3 lakh crore. In a recent interview with Value Research, Devalkar explains how he is navigating the record-high valuations in the market. He also shares insights on recent portfolio adjustments, sector rotations and the potential impact of global rate cuts. Below is the edited transcript. Equity markets are hitting new highs. What's driving this rally, and can it continue in the long term? The rally we have seen for the past three to four years is largely due to the micro factor: earnings growth across the board. The last decade (2010-2020), especially the second half, saw a concentration of growth in a few sectors and companies, which led to a polarisation of valuation - compression in most B2B sectors and expansion in a few segments doing well. The current rally has encompassed all sectors of the economy, from investment to consumption and exports, and resulted in a reversal of valuation compression. Despite the high valuations, the markets have been rallying due to strong earnings growth. From a top-down perspective, we expect some fundamental aspects of the Indian economy, including the fiscal deficit, current account deficit, inflation, and interest rate, to move southwards, which is why India appears superior to the rest of the world. Despite the high valuations, markets are taking comfort in macro stability. With valuations at record highs, how are you finding value in this market? I don't see much value in the market. Some segments are overvalued, and some other segments are less overvalued. The Indian market has never been cheap, and it's unlikely that one can find absolute value anywhere in this market. But on a relative basis, if you notice the broader sectors, which are mostly represented in the large caps, one may observe relative value in private sector financials, especially the banks where no rating is happening, and even the fast-moving consumer