As India steps on the gas, FPIs step up bets on auto

ET Intelligence Group: Indian auto sector is turning into a hot cake for foreign portfolio investors (FPI).

According to an ETIG analysis, their portfolio allocation to the sector increased by 1.5 times to a four-year high of 10.3% in the June 2016 quarter.

Of their total buying of Rs 13,800 crore in the quarter, nearly 40% was deployed in auto stocks following expectations that the sector will be a major beneficiary of the implementation of the Goods and Services Tax (GST) and a puck-up in demand due to the increase in salaries of government employees because of the 7th Pay Commission recommendations.

FPIs have asset under management of $311 billion (approximately Rs 20,52,600 crore) in Indian equities.

Their allocation to the auto sector is the third-largest after banking (32.4% share) and technology (14.8%). The auto sector contributed nearly a quarter of the total Nifty gains of 557 points, or 6%, in the past three months.