Axis Direct’s Quant model remains pro-cyclical for October 2026, favoring a 'Growth-Momentum Barbell' strategy while avoiding defensive stocks. The firm reports that momentum and growth factors currently offer the highest alpha potential. Despite significant year-to-date foreign outflows, the model retains its current portfolio weights, focusing on stock-specific selection in sectors like Banking, Healthcare, and Discretionary. Investors are advised to prioritize active stock-picking over traditional defensive defensive plays.
Axis Direct Quant Model Maintains Pro-Cyclical Strategy
- Axis Direct Quant retains its pro-cyclical stance for October 2026 with a 'Growth-Momentum Barbell' allocation strategy.
- High-conviction picks include Federal Bank, Bank of Maharashtra, Radico Khaitan, Tbo Tek, Sai Life Sciences, Global Health, Star Health, Capri Global, Netweb Technologies, and Adani Energy Solutions.
Reader Takeaway: The model prioritizes Growth and Momentum over defensives, focusing on high-alpha stock selection despite current market volatility.
What just happened
The Axis Direct Quant model has opted to maintain its existing portfolio weights for October, resisting defensive shifts despite broader market volatility. The strategy focuses on a balanced 'Growth-Momentum Barbell' approach, allocating 30% each to Growth and Momentum, while keeping Value as a neutral 20% anchor. Quality and Low Volatility factors remain underweighted.
Why this matters
The strategy highlights that while global central banks remain in a 'wait-and-watch' mode and domestic markets face inflationary pressures, alpha can still be found through stock-specific selection. The model identifies an expanded dispersion spread in Momentum (14.9%) as a signal for active stock-picking potential.
Strategic Rationale
The firm explicitly labels the 'flight to safety' into defensive sectors as a trap, citing the poor risk-adjusted performance of Low Volatility factors. Conversely, the Growth segment leads the firm’s valuation pillar with a perfect 10.0 score. The model notes that while foreign outflows have exceeded ₹3 lakh crore year-to-date, cyclicals remain the only categories generating positive risk-adjusted returns.
High-Conviction Stock Picks
The model has identified ten stocks that passed its fundamental filters for earnings momentum and positive surprises:
- Banks: Federal Bank Ltd, Bank of Maharashtra Ltd
- Discretionary: Radico Khaitan Ltd, Tbo Tek Ltd
- Healthcare: Sai Life Sciences Ltd, Global Health Ltd
- NBFC: Star Health and Allied Insurance Company Ltd, Capri Global Capital Ltd
- Telecom & Media: Netweb Technologies India Ltd
- Utilities: Adani Energy Solutions Ltd
What to track next
Investors should monitor how these specific holdings perform as the market digests inflationary pass-through risks from volatile crude oil prices and ongoing liquidity constraints.