Mutual Funds Houses Rose Stakes in Auto Stocks in August: Do You Own Any?

In August 2025, the equity mutual funds actively deployed capital, evidenced by a decline in their aggregate cash reserves from ₹1.85 lakh crore to ₹1.76 lakh crore. The month saw a flurry of block deals, providing fund houses with fresh opportunities to invest incoming flows. As per the report by Nuvama Alternative and Quantitative Research highlights how India’s top mutual funds repositioned themselves in the auto sector during this period.

Key Fund Activity in Auto Stocks

• Axis Mutual Fund significantly increased exposure by investing ₹564 crore in Maruti Suzuki and ₹305 crore in Hyundai Motor India.
• Franklin Templeton Mutual Fund added Mahindra & Mahindra shares worth ₹285 crore and picked up Ashok Leyland stock worth ₹257 crore.
• SBI Mutual Fund placed a strong bet on autos, investing ₹656 crore in Maruti Suzuki.
• In contrast, HDFC Mutual Fund reduced its stake in Mahindra & Mahindra by ₹235 crore and exited CarTrade Technologies entirely.
• ICICI Prudential Mutual Fund made a major exit from Maruti Suzuki India, selling shares worth a massive ₹4,382 crore.
• Aditya Birla Sun Life Mutual Fund trimmed its holding in Hyundai Motor India by ₹209 crore.

GST Rate Restructuring for Vehicles and Auto Components

In a major revamp, the government has restructured the GST rate slabs applicable to vehicles and auto parts. Notably, the Compensation Cess has been removed, reducing the effective cost of many vehicles.

As part of the overhaul, the previous 12% and 28% slabs have been abolished. The new structure includes 5%, 18%, and an additional 40% slab for high-end and luxury categories.

18% GST Slab

• Petrol, hybrid, LNG, and CNG cars

(Petrol: up to 1,200cc and under 4 meters; Diesel: up to 1,500cc and under 4 meters)

• Motorcycles (up to 350cc engine capacity)
• Goods transport commercial vehicles
• Three-wheelers
• Tractors (above 1,800cc)
• Ambulances and buses
• Auto parts (excluding tractor-specific parts)
• Tyres

5% GST Slab Covers

• Electric vehicles (EVs)
• Tractors (up to 1,800cc)
• Tractor parts and tyres
• Bicycles and other non-motorized cycles
• Tanks and armoured fighting vehicles

40% GST Slab (Luxury & Sin Goods):

• High-end and luxury cars
• Petrol cars with engine >1,200cc or diesel >1,500cc, or length >4 meters
• Motorcycles above 350cc
• Station wagons
• Racing cars

Also Read: SEBI Approves Key Reforms to Boost Investor Protection and Inclusion in Mutual Funds

Conclusion

The mutual fund activity in August clearly signals a strategic shift toward deploying excess cash into equities, particularly within the auto sector. While some fund houses aggressively increased their exposure to leading automotive stocks like Maruti Suzuki, Hyundai, and Mahindra & Mahindra, others took a more cautious stance, booking profits or realigning portfolios.

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.