Why has the focus on mutual funds increased?
In india, the focus on the energy sector has increased in recent years. india, which is dependent on imports for its energy needs, is constantly focusing on innovation in this sector. This is the reason why investment by both private sector and public sector in energy is increasing rapidly. In such a situation, great opportunities are being created for investors in the energy sector. The figures also confirm this, because the investment of equity mutual funds on the energy theme has increased to more than Rs 4 lakh crore.
The energy theme is going to last for many decades
The increased focus of asset management companies on the energy theme is being helped by rapid urbanization, industrialization and government measures. This is the reason why equity mutual funds have invested more than Rs 4 lakh crore in energy themed opportunities in India. Experts say that energy is being recognized as a multi-decadal theme, that is, a theme that lasts for several decades and this is why fund houses are now launching new offers to meet the needs of investors willing to take risks in energy exposure.
Investment more than doubled in a year
According to the data, equity mutual fund investment on energy theme increased to Rs 4.07 lakh crore by june 30, 2024. This is more than double the level of a year ago i.e. till june 2023 and almost four times since june 2019. Experts believe that significant opportunities are being created for investment in energy stocks. Right now these stocks are trading at attractive valuations. India's energy demand is already ranked fourth in the world. Now it is going to increase further. Experts estimate that it will grow by 4 percent to 5 percent annually in the coming years.
For this reason, experts consider energy theme better
Nitya Mishra, fund manager of ICICI Prudential AMC, says - We believe that the valuation in the energy sector is good right now. For example, the Nifty Energy Index is currently trading at a price-to-earnings (P/E) discount of 38 per cent compared to the broader Nifty 50 index. This is the situation when the energy sector has recently outperformed the broader market. The price-to-book (P/B) discount is even more important.
Good returns expected in the coming decade
He said that investors should adopt a long-term approach. They should focus on companies with strong growth potential and resilience. The growth momentum for energy-related investments in india is undoubtedly strong. Coupled with strong energy demand, supportive government policies and rapid technological progress, the sector is expected to get good returns in the coming decade.
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