"Our endeavour to generate alpha will not be at the expense of deviating from the fund's stated investment mandate"

The equity schemes of Axis Mutual Fund are passing through rough weathers. With the growth style of investing going out of favour, most of their prominent equity schemes have lagged their peers by a fair margin. That's unusual for a fund house which has churned out some solid returns for its investors over the last decade. We caught up with Shreyash Devalkar, one of their star fund managers, about his views on the markets, his funds and what can trigger a comeback. Here are the edited excerpts. Given the current state of the global macroeconomic and geopolitical environment, what concerns you the most in the context of the Indian markets? The current macro environment is drastically different from the one we had about 12 months ago. Both globally and domestically, we are witnessing a shift in focus from 'growth' to trying to contain 'inflation'. Globally, most central bankers are refocusing their attention on 'run-away' inflation, pivoting from its post-Covid growth-focused stance. Given this backdrop, we believe the coming two to three quarters are likely to witness margin pressures. The impact of inflation on demand is yet to be seen. This will lead to moderation in earnings expectations as we tide through this period of rising interest rates. The interest rate increase cycle also leads to valuation compression. That process is already in progress in markets. After a bit of correction, do you see more investment opportunities or challenges in the markets now? The fact that you are holding reasonably high amounts of cash in your portfolios (large-cap, flexi-cap and mid-cap) suggests the latter. What are the triggers that will prompt you to deploy the money speedily? After the near one-sided move over the past two years, the Indian markets were poised for a correction, given that prices had run way ahead of fundamentals. The extent of correction has been slightl