Nifty vs Gold: 2026 could mark the large average reversing trade, says Shreyash Devalkar of Axis MF

Edited fragments from a chat:

How comfortable are you after a year of UnderPerformance now with ratings on the Indian stock market?

In the past year, stock markets experienced a sharp correction followed by a rebound. At their peak, indices were powered by euphoric sentiment and aggressive buying of both Fiis and Diis, which resulted in increased valuations. The subsequent decline helped to moderate these valuations, especially in the large CAP room, where growth is now delayed and the valuations appear to be reasonable. Segments such as Defense, Power Capex, Tourism and Electronics Manufacturing Services (EMS), on the other hand, continue to show strong growth, but the valuations remain stretched. These themes are more prominent in the segments of the middle and small cap. As a result, investors can consider maintaining diversified exposure between market capitalizations.

We believe that markets can remain accessible in the short term. In such an environment, the Alfa generation will strongly depend on the selection of the stock. It is remarkable that about 35% of the shares act above their levels a year ago, when the market was at its peak, which emphasized the importance of selectively.

The market expects profit recovery in H2 from FY26. What are your expectations and what bags of the market will you be those who recover the fastest?

The pace of EPS -Down grades has been moderated in recent months, although Q2FY26 can see further revisions due to the current weak demand environment. In the future, however, we expect a period of stable income after considerable downgrades in the last 12-15 months. In the coming quarters we expect profit growth will be quite wide. A stable supporting macro environment, lower policy rates and income tax in combination with GST reduction can restore the market. Given the current scenario, we believe that financial data, consumption -related sectors and power etc. can be the sectors that can see recovery in growth.

How do you position portfolios in view of the sharp run-in car and consumption shares post-gst cuts?

After the GST rationalization, it is expected that the trend to premiumization will strengthen, supported by a pick -up in the replacement cycle. GST reductions will probably lower the prices of the passenger vehicle (PV) by 5-10% and two-wheeler prices by around 8%, which should stimulate demand. We expect that ambitious product segments will benefit more because of a higher demand elasticity. Although improved affordability encourages first buyers, we believe that the revival in the replacement demand-de in recent years has been made-one more important growth motor for PVs. In the medium term, growth prospects via FY28E can be further supported by the implementation of the wage committee and gradual benefits of income tax reduction.

In the room for sustainable consumers, the reduction of GST from 28% to 18% for room air conditioners, TVs with large screen and dishwashers, these products brings in line with other household appliances. However, the impact may not be immediately, because consumers will probably falter purchases based on income levels and necessity. In the meantime, the Auto Index has already returned to its 2024 peak, increased by almost 30%since April 2025. Sustainable shares of consumers are also Gerally. The sustainability of the momentum will depend on the actual volume growth during the festive season, the continuation thereafter and the margin for the rest of the year.

Multi-as set allocation funds have grown in popularity due to the rise of gold and silver. What would your advice be for investors who want to understand whether they should invest in Gold-Silver ETFs or leave the Activallocation track via a Multi-Axis Allocation Fund?

For most investors, Multi-ASCET allocation funds offer a handy, all-in-one investment solution. These funds offer diversified exposure to activa classes – including gold and silver – near professional management and dynamic recalculation. Fund managers can adjust allocations based on market conditions, valuations and macro trends, which adds valuable flexibility in volatile environments. On the other hand, gold and silver -ETFs offer direct exposure to the price movements of these noble metals. They are very suitable for investors who want to take a targeted position in gold or silver, in particular as a cover against inflation or geopolitical uncertainty. There is no one-size-fits-all approach. As a fund house we encourage investors to adopt a disciplined strategy for asset spreads. In addition to domestic diversification, we also recommend that you consider exposure to foreign shares to improve the resilience of the portfolio and to strengthen global growth opportunities.

Do you think 2026 could be the year of average reversal if Nifty will perform better than precious metals?

Nifty’s profit growth and sectoral rotation (especially in banks, telecom and chemicals) suggest potentially for outperformance versus precious metals that enter into a consolidation phase. Precious metals can still gather and be able to take advantage of the depreciation of the rupid, but could normalize the return, making shares more attractive from a risk agreement perspective. Further. The PE premium from India to the emerging markets remains below the average of 10 years, but the restoration of the domestic economy can activate EPS upgrades and repetition, which stimulates relative outperformance.

Given a number of factors such as GST, monetary relaxation, a reduction in income tax and low inflatio pressure, Has consumption now become a consensus trade in Dalal Street? How Bullish are you and do you think we are at the start of a multi -year cycle for cars and consumer games?

Van GST reductions are expected to support the profit directly by stimulating the growth of a higher volume amount to price elasticity of the bending and by improving profit margins for companies with price power. However, the broader impact will depend on the cumulative effect of multiple factors: the implementation of the wage committee, gradual benefits of income tax and GST reduction and possibly lower policy rates. In general, India remains a mandatory domestic consumption story in the long term. We believe that the cycle for car and consumption shares is ready to get strength, supported by structural in the forest’s wind and improve affordability

Tell us on which other sectors you bet and why?

Against the background of lower interest rates, expected GST rationalization and a likely boost in consumption, we continue to have an overweight position in the consumption theme. If this macro -tailwind are effectively passed on to end consumers, they can reset the consumption cycle of India. For example, benefits in sectors such as cement and building materials can improve the affordability of homes, which in turn can stimulate the credit cycle. This supports overweight position in the financial sector, in particular NBFCs, which are well positioned to take advantage of the increased credit demand and improved liquidity conditions.

We also remain constructive about discretionary games of consumers – especially in retail, hospitality and travel and tourism – who are ready to win by strengthening the domestic momentum and the demand from the festive season. Our GDP numbers validate our attitude. We have exposure to selected cars and we retain an overweight in pharmaceutical products despite some prices headwind in the US. We remain underweight. Moreover, we are positive about structural themes such as renewable Capex, power transfer and defense. In general, India continues to offer a mandatory growth possibility in the medium to long-term, supported by resilient domestic demand, a favorable national prospects after the Monsoon and supporting macro-economic indicators.

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