Axis MF CIO: Large-caps Attractive After Correction — SkimNews
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- R. Sivakumar, chief investment officer at Axis Mutual Fund, said large-caps look attractive again with headline indices range-bound, noting they are trading more than one standard deviation below long-term averages — relatively cheap versus history, but "not absolutely cheap."
- Banks are emerging as one of the clearest examples of market laggards turning, with system credit growth accelerating from around 10% a year ago to 16-18% and asset quality described as clean.
- Mid- and small-cap stocks look expensive on a standalone P/E basis but earn that multiple through growth — when Nifty earnings were compounding around 8%, mid- and small-caps were compounding 15%+, a gap Sivakumar said is widening even as Nifty earnings pick up.
- Manufacturing and export-oriented companies in the mid- and small-cap segments stand out as particularly positive, with India accounting for less than 2% of global manufactured-goods exports and new FTAs with the EU and UK delivering tariff parity with Vietnam and Bangladesh.
- Private-sector capital expenditure has revived once infrastructure spending is stripped out of the headline aggregate, which Sivakumar said looks weaker only because infrastructure spending has slowed.
- Rupee depreciation bodes well for exporters, reinforcing the constructive case for the manufacturing segment alongside the new trade deals.
- Sivakumar advised investors sitting only in small-caps to diversify into a multi-cap or flexi-cap fund to gain exposure across the market-cap spectrum and then stay the course.
Why it matters: With large-caps trading one standard deviation below their own historical valuations and bank credit growth nearly doubling to 16-18%, Sivakumar is framing the correction as an entry point for established names — but directing the higher-growth capital toward mid- and small-cap exporters now that EU and UK FTAs erase the tariff disadvantage versus Vietnam and Bangladesh.
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