Axis Bank, amongst the banking stocks, has the potential to be an outperformer over the next few quarters, since other giants like Kotak Mahindra Bank, HDFC Bank, and ICICI Bank are currently somewhat subdued in comparison, according to Dipan Mehta, Director of Elixir Equities.

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Highlighting the attractive valuation of Axis Bank, Mehta said in an interview with CNBC-TV18 that this financial institution has reported a ‘stellar set of numbers’ and it has the potential to be a significant outperformer among its peers over the coming quarters

Mehta, however, acknowledged that other banking giants like Kotak Mahindra Bank, HDFC Bank, and ICICI Bank are currently somewhat subdued in comparison, as investor and trader interest has shifted towards public sector banks and smaller, tier two, and tier three banks. These alternatives offer similar growth rates but with more appealing valuations.

Mehta suggested that Axis Bank could be a valuable addition to a core investment portfolio, providing stability and the potential for long-term outperforming returns.

Over the last month, there has been a decrease of more than 4% in Axis Bank share value.

In contrast, Mehta's sentiments toward Tech Mahindra were far less optimistic, describing the relationship with the tech company as being on the ‘hate side’. This skepticism primarily revolves around the slow growth rates in the large-cap IT sector, where major players have struggled to achieve the 14-15% growth rates seen in previous years.

Despite this apprehension, Mehta recognised the importance of maintaining an allocation to the technology sector, especially given its significant presence in benchmark indices like the Sensex and Nifty. To navigate the current climate, he recommended focusing on midcap IT stocks such as Persistent Systems, Coforge, Tata Elxsi, and KPIT. These midcap IT companies continue to demonstrate respectable growth rates in the range of 14% to 18% in both their top and bottom lines, which could help sustain their valuations.

Mehta's overall outlook for the technology sector is somewhat uncertain, suggesting that a turnaround to higher growth rates for large-cap IT companies might be increasingly challenging in the near term.

The stock has experienced a decline of over 13% in the past month.

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(Edited by : C H Unnikrishnan)