Axis Direct’s latest Quant Report advocates for a 'Growth-Momentum barbell' strategy, shifting away from defensive sectors. The firm has identified ten high-conviction stocks, including Bank of Maharashtra, Bajaj Finance, and Adani Ports, prioritizing stocks with strong earnings momentum to capture cyclical market gains.
Axis Direct Quant Report: Pivot to Growth and Momentum
Axis Direct’s September 2026 Quant Report outlines a tactical pivot toward a Growth-Momentum barbell strategy. The firm maintains an aggressive pro-cyclical market stance, citing macroeconomic resilience despite minor economic moderation.
Reader Takeaway: The firm shifts to growth and momentum, trimming defensive quality/low-volatility assets to chase cyclical upside.
What just happened
Axis Direct has rebalanced its factor allocations, placing 60% of its total focus on Growth (30%) and Momentum (30%). Defensive factors, including Quality and Low Volatility, have been relegated to underweight positions at 10% each. The firm argues that traditional safe-haven factors are currently failing to provide expected protection in the prevailing market regime.
Why this matters
This strategic rotation indicates a high-conviction bet on market breadth. By narrowing the focus to stocks demonstrating strong earnings surprises and positive momentum, the firm aims to capitalize on wider dispersion spreads. Growth and Momentum factors currently exhibit positive dispersion spreads of 10.2% and 9.9% respectively, signaling that the market is actively rewarding selective stock picking over broad defensive index exposure.
High-Conviction Picks
The firm highlighted ten specific stocks for portfolio inclusion, capped at three per sector:
- Banks: Bank of Maharashtra Ltd, Jammu and Kashmir Bank Ltd
- Discretionary: Radico Khaitan Ltd
- Healthcare: Gland Pharma Ltd, Global Health Ltd
- Industrials: Adani Ports and Special Economic Zone Ltd
- Metals & Mining: National Aluminium Co Ltd
- NBFCs: Bajaj Finance Ltd, Star Health and Allied Insurance Company Ltd
- Staples: CCL Products (India) Ltd
Risks to watch
Investors should note that the 'Growth-Momentum' strategy is inherently pro-cyclical. Any unexpected macroeconomic downturn could disproportionately impact these holdings compared to a more diversified or defensive portfolio. Additionally, the strategy relies on the continued effectiveness of stock selection as indicated by current dispersion spreads; a contraction in these spreads could limit alpha generation.
What to track next
Watch for further adjustments in the dispersion spreads. If the current positive trend in Growth and Momentum narrows, the firm may be forced to revisit its allocation stance on Value, which currently serves as a neutral anchor.