LIC MF’s Toshniwal backs IT, banks, retail NBFCs; cautions on FMCG and staples

Synopsis

Jaiprakash Toshniwal of LIC MF Asset Management sees a positive turn for Indian stocks. Festive demand and a resilient economy are key factors. He favors IT, banking, and retail NBFCs. He advises caution on overvalued staples. He notes improved conditions in the metals sector. Domestic factors and steady foreign investment should support markets.

With the domestic economy showing resilience and festive demand set to provide a boost, LIC MF Asset Management’s Fund Manager Jaiprakash Toshniwal believes Indian equities are entering a more constructive phase. In an interview with ET Now, Toshniwal outlined his investment strategy, highlighting opportunities in IT, banking, and retail NBFCs while cautioning against overvalued staples and home-care companies.

“Uncertainty has reduced quite a bit. We had GST rationalisation on one hand and some positive indicators from the US side. The news flow looks much better compared to last quarter,” Toshniwal said. He expects the premium consumption segment to do well in the festive season, while mass consumption may continue to struggle due to weak volumes and competition from unorganised players.

Banks, IT in focus; FMCG faces headwinds

Toshniwal said his fund is looking for sectors where earnings growth can outpace nominal GDP growth, with a focus on quality at the right price. “We do see positives on the banking side, and there is scope for rerating in IT. However, staples and home and personal care continue to face volume pressure in the mass and upper mass segments, and valuations are expensive,” he explained.

On the IT sector, Toshniwal was particularly optimistic about the engineering R&D (ER&D) space, which he believes will benefit once tariff issues in the US and Europe ease. “Auto companies are likely to step up investments, and ER&D-focused IT firms have strong exposure there. We expect growth to return to 10–12% in the medium term,” he said. However, he remains cautious on traditional IT services, noting muted client spending and the need to be selective on valuations and cash flow metrics.

Retail NBFCs well placed for credit growth

The fund manager also sees strong prospects in retail-focused NBFCs, driven by healthier household balance sheets and improving asset values, particularly in precious metals. “Personal loans, credit cards, and housing loans are growing at high single to low double digits. We expect this momentum to sustain and contribute around 1.5–1.6% to nominal GDP growth in the medium to long term,” Toshniwal said.

Metals improving, but FMCG to be avoided

While previously negative on metals, Toshniwal said improving global conditions—especially in China—have pushed up prices, making the sector more balanced. However, he reiterated that staples and home-care companies should be avoided given their stretched valuations and subdued earnings growth potential.

Overall, Toshniwal expects domestic triggers, steady FII flows, and festive consumption to support markets in the near term, though investors should remain selective. “Whenever there is multiple expansion, there is good money to be made. But quality has to come at the right price,” he concluded.

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