Jaiprakash Toshniwal, Sr. Equity Research Analyst -; Fund Manager - Equity, LIC Mutual Fund Asset Management Ltd

11 Mar 2022 , 09:13 AM

In an interaction with Mamta Maity, indiainfoline.com, Mr. Jaiprakash Toshniwal, Sr. Equity Research Analyst & Fund Manager – Equity, LIC Mutual Fund Asset Management Ltd said “Budget 2022 has been a good balanced budget with focus on both consumption and capex. We do see opportunities in manufacturing sector and expect some allocation to these sectors.”

RBI maintained the status quo on rates in February and maintained a dovish stance which came as a welcome surprise for markets. What is the trajectory you foresee for rates in near future?

RBI has been able to manage the monetary policy very effectively in the last two years since the outbreak of covid pandemic. While the status quo on the rates has been maintained based on positive outlook on growth and inflation — one may notice the yield curve has started to flatten at least on the short tenure side — One year G-sec rate is above the repo rate — which means rate has gone up — without RBI taking any rate hike. Give the current global environment, we may see global yields increasing and RBI may also hike rates going forward.

Indian market picked up momentum post Budget after initial US Fed jitters stabilised. What are your views on markets for 2022? What will be next trigger for markets?

After long 5-6 years we expect an earnings upgrade in market with EPS growth from FYY21E — FY24E projected to be at least 23% (source: Internal). In this background we remain positive on markets. However, one need to be very selective on stocks and sector selection during the current year.

Budget 2022 was focused on boosting growth — do you see sectoral rotation taking place? Which should long-term investors focus on?

Budget 2022 has been a good balanced budget with focus on both consumption and capex. We do see opportunities in manufacturing sector and expect some allocation to these sectors.

Which theme will dominate markets in 2022 — value of growth? We saw a lot of liquidity chasing many mid and small-cap stocks in 2020-2021 to tap growth. What are your views?

Very difficult to comment on the same. However, one should note that India has been a growth economy and as per various strategies — in a growing economy, growth stocks tend to outperform. We would reiterate our thesis that earnings growth drives price performance.

Crude seems to be on the boil. What is your call on the commodity market in 2022?

A difficult call to make — but at this time considering geopolitical issues, one may expect oil prices to remain volatile.

Given the government’s focus on pushing CAPEX are there any sectors poised for re-rating?

We believe sectors related to Manufacturing economy such as textile, auto and industrials consumable sector are seeing good demand and poised for growth. We may see good earnings led outperformance from these sectors. 

Any new age developing themes which investors can look at for next 2-3 years? And the ones which one can avoid amid high valuations?

As a Fund house we play six core theme in our portfolio which are 1) Formalization and Consolidation 2) Technology adoption 3) Structural changes 4) Increase discretionary spend led by urbanization 5) Increasing share in global exports and 6) Financialization of savings. We believe these core themes are center to economic growth in India. One should look to invest in companies / sectors getting benefit via these themes. Valuation is a very company specific call and one need to evaluate all prospect along with valuation before investing.