Smallcaps, NBFCs and consumer durables set for a revival in FY26: Dikshit Mittal of LIC MF

According to Dikshit Mittal of LIC Mutual Funds, Indian equity markets have been consolidating over the past 15 to 20 months, and investors are waiting for key triggers to drive the next phase of the bull run. Speaking to ET Now, Mittal emphasized that earnings growth, a possible trade deal or stabilization of the rupee could act as a catalyst for market optimism.“Yes, so the market has been consolidating within a certain range for the last 15 to 20 months and until there is a positive trigger, whether it is in the form of an acceleration in growth or some kind of trade deal or even if the rupee also stabilizes, the market is waiting for one of these three triggers. And we are hopeful that maybe early next year one of these three things will materialize and the markets can be more optimistic in the coming year,” Mittal said.

On the sectoral outlook, he emphasized that stock-specific and sector-specific calls will be crucial, especially in the midcap and smallcap segments, which have underperformed largecaps over the past year. “Most of the valuation concerns, you can say, have been allayed after this underperformance over the last year and a half. From now on, the market will be more stock-specific and sector-specific and the companies that are putting up good numbers and have good prospects, so those types of companies may start to perform well from the beginning of next year,” he noted.

According to Mittal, valuations are justified in relation to earnings growth. “So you have to look at valuations in the context of expected earnings growth. What we see now is that midcaps and smallcaps as a whole have a better view of earnings growth than the large caps. I think this is also reflected in the valuations,” he explains.

Mittal highlighted that NBFCs, consumer discretionary and private capital investment are sectors poised for growth in FY26. “In terms of sectors, we are positive on the NBFCs looking at the way interest rates have come down… Secondly, we have been incrementally positive on the consumer durables side over the last two quarters because of the kind of efforts that the government and central bankers are taking to revive consumption in the country… And finally, we are positive on the private capital investment side,” he said.

He also discussed selected IT segments and the commercial vehicle (CV) cycle. “If you have to be very inventory and pocket specific… there are pockets, for example, engineering R&D companies or companies that are more focused on the BFSI type of space or manufacturing space; these three to four pockets within the IT space have a relatively good view of revenue,” Mittal said.

On CVs, he added, “We have become bullish on the CV cycle, especially the next two quarters. This sector has good prospects, and we are also playing this sector through OEMs, but more importantly through the lenders in the NBFC space. I think we have good visibility in this area at least for the next two quarters.”Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of the Economic Times)