SECTORAL OUTLOOK 2023

10 fund managers share their outlook on the key sectors of the economy to help you make the right investment choices in the year ahead

'We expect the commercial-vehicle segment in India to continue to do well'

The auto index is one of the top performers over the last one year. It is also the top holding in your fund. Will the momentum continue in 2023? Which pockets within the auto sector will likely do well? Which could be the laggards?

Globally, the automobile sector has been in a transition mode. Customer preference for better and greener products has led to a change in positioning across the automobile value chain. A rising per-capita income, better infra and availability of finance will continue to act as key drivers for automobile growth in a country like India where the purchase of automobiles is still considered to be of aspiration value. Global auto majors have realised this and have come up with multiple products to cater to various preferences of the emerging middle class in India.

Fund Manager, Invesco Mutual Fund manages Invesco India Mid Cap Fund, which has 17.68 per cent of its assets in the auto sector as of November 2022)

The need for personal mobility post COVID-19 and pent-up demand have led to an improved scenario for automobile players who have been able to pass on the higher cost to consumers. Over and above, better entry valuations at the start of CY22 have led to improved performance for the automobile sector in CY22.

The advent of technology has led to disruptions in the market share across many players, where challengers have come up with newer products and have disrupted market shares of incumbents. Given the lack of clarity as regards who will emerge as leader amongst the automotive OEMs original equipment manufacturers), we have adopted the approach of investing in auto ancillaries that benefit from being suppliers to these OEMs as well as being a low-cost destination for global exports.