Mutual funds invested in the automobile sector have moved away from the sector

Mutual funds, which have been floating in the automobile sector due to various adversities, have also moved away from the sector. According to data from the Association of Mutual Funds in India (AMFI), investment in the auto sector was reduced by equity mutual funds during the month of August. It has come down to a 12-month low of 7.5 per cent as fund managers cut auto allocations.

The auto sector has been facing many challenges for the last one and a half years due to the epidemic. In addition, there has been an increase in chip shortages in recent months. Rising fuel prices, rising prices of various metals, and other adversities, including new insurance rules, have not removed the cloud of calamity that has engulfed the industry.

Earlier the decline in people's income due to the epidemic had an adverse effect on auto sector sales. On the other hand, the recent increase in the cost of production of auto manufacturers has also had an adverse effect on the prices of vehicles.

However, last August saw an improvement in the retail sales volume corresponding to the festivals. But, the slowing down of the manufacturing process had an adverse effect on wholesale volume. According to automakers, the shortage of chips is likely to continue in the near future and the difficulties in the manufacturing process are likely to remain in the near future.

Thus, mutual fund managers have decided to stay away from the automobile sector due to various adversities. During the month of August, various equity mutual funds raised Rs. 203.50 crore was invested. Which in its previous July was Rs. The investment was Rs 302.5 crore. During the month of August, investments by mutual funds in the auto sector declined by 31.12 per cent.

The month of August also saw a decline in investments made by mutual funds in other sectors, including the auto sector. These mainly include the metal, healthcare, public sector banks, consumer durables and cement sectors. All of these sectors have seen a flurry of funds in the past.

Meanwhile, knowledgeable circles in the auto sector believe that the government has recently spent Rs. The auto-auto industry will gain momentum with the announcement of a Rs 206 crore Production Linked Incentive (PLI) scheme. In addition, retail sales are expected to increase in the coming festive season.