Speaking to ET Now, Mittal said that while foreign institutional investors (FIIs) have not yet returned in a big way, improving earnings visibility and easing global uncertainties could provide market support going into FY27.
Macros strengthening, earnings downgrades easing
Mittal noted that India’s macro indicators are on an upward trajectory, with nominal GDP growth expected to accelerate — a trend reflected in recent budget projections.
For the past two years, corporate earnings growth has remained in the mid- to high-single-digit range. However, he highlighted that the pace of downgrades has reduced significantly and third-quarter results came in better than expected.
“Going into FY27, there is a high probability that earnings growth could move from mid-single digit to early double digit. That should give support to markets,” Mittal said.
He added that global concerns such as tariff wars and geopolitical tensions appear to be stabilising, which improves the broader risk environment.
Private capex and manufacturing: Core themes
Mittal remains constructive on private capital expenditure, especially in power capex, data centres and manufacturing.Even during a period of moderate broader earnings growth, these segments have outperformed.
“With trade deals between India and the EU, as well as the US, manufacturing could gather further momentum. Private capex and manufacturing are key themes we are betting on,” he said.
Within manufacturing, LIC MF is focusing on:
- Import substitution — sectors where domestic production is replacing imports
- Export-linked growth — companies integrated into global supply chains
Mittal noted that many export-oriented firms did not lose customers during tariff uncertainties; margin visibility was the only concern. With tariff clarity improving, visibility has strengthened.
Private banks and consumption to see recovery
Beyond capex-led themes, Mittal expects earnings recovery in private banks and consumption sectors.
“These two sectors could perform well in FY27 as earnings growth improves,” he said.
IT sector: Wait for earnings visibility
On IT stocks, Mittal believes the issue is less about valuation de-rating and more about earnings visibility.
Even before AI-related concerns surfaced, many IT firms were delivering low single-digit growth.
“Market is waiting for earnings acceleration. If software spending improves globally, sentiment can turn. But for now, we are in wait-and-watch mode for the next one to two months,” he said.
However, he dismissed concerns that the IT sector’s business model is under existential threat.
“These companies will adapt. AI will likely act as an enabler, not a disruptor of their core models,” Mittal added.
Textiles get relief; pharma selectivity key
On export-facing sectors, Mittal sees improved prospects for textiles following clarity on tariff reductions from earlier elevated levels.
Textile exporters, which operate on thin margins, stand to benefit meaningfully from tariff reductions from 50% to around 18%, improving medium-term visibility.
In pharma, however, LIC MF prefers domestic-focused companies over export-heavy names.
Outlook
With earnings growth likely to accelerate, macro indicators stabilising and tariff-related uncertainties easing, LIC Mutual Fund AMC remains constructive on Indian equities heading into FY27.
Key focus areas include:
- Private capex
- Manufacturing (import substitution + exports)
- Private banks
- Consumption recovery
- IT remains on watch pending clearer growth visibility.
As Mittal summed up, markets may need earnings acceleration to unlock the next leg of gains — but the broader setup appears constructive.