Nippon India Mutual Fund has introduced its latest offering, the Nifty Auto Index Fund, an open-ended scheme replicating the Nifty Auto Index. This New Fund Offer (NFO) opens on November 14, 2024, and closes on November 28, 2024 providing investors an opportunity to tap into the growing potential of India’s automotive sector.
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Feature
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Details
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NFO Period
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November 14 - November 28, 2024
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Benchmark
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Nifty Auto Total Return Index (TRI)
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Fund Manager
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Himanshu Mange
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Investment Objective
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To replicate the performance of the Nifty Auto Index
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Minimum Investment
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₹1,000
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Exit Load
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Nil
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Risk Level
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Very High
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Key Details of the Scheme
The Nippon India Nifty Auto Index Fund offers a cost-effective way to invest in India’s automotive sector, mirroring the Nifty Auto Index, which includes 15 leading companies like Mahindra & Mahindra, Tata Motors, and Maruti Suzuki. With exposure to diverse segments such as passenger vehicles, EVs, and auto components, the fund benefits from sector growth driven by rising incomes, urbanization, and government initiatives like FAME and PLI schemes. Its focus on the electric vehicle revolution positions it well for long-term opportunities in the evolving mobility landscape.
Key Constituent
The Nifty Auto Index tracks the performance of the Indian automobile sector on the NSE. The index comprises 15 stocks across passenger cars, two-wheelers, auto components, and tires.
The top constituents by weightage are Mahindra & Mahindra (22.2%), Tata Motors (16.1%), and Maruti Suzuki (13.3%) - major passenger and utility vehicle makers. Other key players include Bajaj Auto, Hero MotoCorp, Exide Industries, Eicher Motors, TVS Motor, Ashok Leyland, MRF, and Apollo Tyres.
The index reflects the diverse and critical automotive industry, which contributes 7.1% to India's GDP and is seeing steady post-pandemic recovery with growing EV adoption and FDI inflows.
Sector Overview: Why Automobiles?
The Indian automotive sector is a critical contributor to the nation’s economy, accounting for 7.1% of GDP and employing millions. With approximately 28.4 million vehicles produced in FY24, the sector has seen a steady post-pandemic recovery.
EV Adoption: Electric vehicle penetration has grown from 1% in FY20 to 7% in FY24, driven by subsidies and reduced battery costs.
FDI Inflows: The sector has attracted USD 36.3 billion in equity inflows since 2000, reflecting robust global investor confidence.
Premiumization Trend: Consumer preferences for higher-end vehicles and motorcycles are boosting average selling prices and sector revenue.
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Investment Rationale
Investors looking to participate in India’s automotive growth story can benefit from this fund’s systematic approach to replicating the Nifty Auto Index. The fund minimizes non-systematic risks, ensuring returns align closely with the index performance. Its diversified exposure to established players and new-age innovators in EVs and auto components offers a balanced risk-return profile.
Conclusion
The Nippon India Nifty Auto Index Fund provides an excellent opportunity for investors to gain exposure to one of India’s most dynamic sectors. With its diversified portfolio, low-cost structure, and focus on the auto industry’s evolving landscape, this fund is ideal for long-term investors seeking growth in India’s mobility revolution. Consider consulting a financial advisor to align this fund with your investment goals.
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