Q4 to See Gradual Uptick, Not Breakout Rally; Axis MF Bets on Banks

• Shreyash Devalkar, Head of Equity at Axis Mutual Fund, expects Q4 earnings to improve incrementally, not materially outperform.
• Outlook supported by gradual domestic demand recovery, easing cost pressures, and stable financial conditions.
• Axis MF is overweight on capital goods, discretionary, automobiles, NBFCs, and increasing exposure to banks due to healthy profit growth and stable asset quality.
• Devalkar believes AI cannibalization of traditional software has limited real-world case studies, but the scenario is evolving fast.
• RBI is likely done with rate cuts this year; Fed may deliver a single, data-dependent cut but no compelling need for further easing.