Autos accelerate in MF portfolios for the second month, while banks and healthcare lose weight
Mutual fund managers reshuffled their portfolios in August, raising allocations to autos for the second straight month while trimming exposure to private banks and healthcare, showed a report by Motilal Oswal. The shift comes at a time when the government rationalised GST into two-rate structure with a standard rate of 18 percent and a merit rate of 5 percent.
Report showed that the auto sector was the clear standout in August, with its weight climbing to an 8.5 percent share of overall mutual fund portfolios – a 10-month high. That marks a 50-basis-point rise month-on-month, and the second consecutive increase after a long stretch of muted positioning.
Fund managers have been selectively adding to the sector as GST rate cuts on cars and two-wheelers are expected to stimulate demand in the festive season, offering a fresh tailwind to sales already supported by easing input costs.
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Maruti Suzuki and TVS Motor were among the top stocks seeing incremental value additions, with their market value within fund portfolios rising by Rs 8,720 crore and Rs 3,290 crore, respectively. The auto tilt highlighted the belief that policy support, coupled with recovering rural demand, could set the stage for a stronger earnings trajectory into FY26.
Technology also staged a modest comeback after sliding to a 14-month low in July. Sector weight inched up to 7.9 percent in August, a 10-basis-point improvement. Infosys, which saw its value within portfolios rise by Rs 2,940 crore, was among the biggest beneficiaries of the uptick. This comes at a time when the board has approved biggest-ever Rs 18,000 crore share buyback via tender offer route.
On the other hand, private banks saw their weight fall to a seven-month low of 17.5 percent, down 50 bps MoM. Analysts suggested that fund managers may be tactically booking profits in financials, which have been lagging in recent months compared to industrials, autos, and consumer-facing plays. Margin pressure and sluggish credit offtake are also some factors that are keeping fund managers underweight on these private bank players.
Healthcare too saw some moderation after a steady run-up in allocations through July. Its weight slipped by 20 bps to 7.6 percent, though still marginally higher YoY.
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Consumer, telecom, retail, and media all saw incremental weight additions in August, suggesting a broader tilt towards domestic consumption-oriented sectors. By contrast, allocation to capital goods, oil and gas, chemicals, and real estate was pared down.
Among stocks, beyond Maruti and Infosys, notable value additions were seen in Eternal (Rs 8,650 crore) and Adani Energy Solutions (Rs 2,610 crore).
Overall, the August portfolio shuffle reflects a balancing act: fund managers are leaning into consumption and policy-supported themes like autos while trimming exposure to segments facing near-term headwinds. With GST cuts expected to aid auto demand and policy clarity on the horizon, investors appear to be positioning for a more broad-based earnings cycle in FY26.
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