The Telegraph
Wednesday , December 26 , 2012
Since 1st March, 1999
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Mutual funds bet on bank stocks

Mumbai, Dec. 25 (PTI): The mutual fund industry is betting big on the banking space with investments worth more than Rs 42,000 crore in bank stocks — taking this sector’s exposure to the highest level in more than three years.

According to latest data available with market regulator Sebi, the mutual fund industry’s investment in bank stocks stood at Rs 42,022 crore at the end of November, which was 20.59 per cent of the industry’s total equity assets under management (AUM) of Rs 2.04 lakh crore.

Besides banking, the exposure to none of the sectors is in double digits, with software being the second-best with an 8.7 per cent exposure.

At current levels, this is also the highest exposure of the MF industry to banking sector since August 2009 both in terms of percentage as well as in absolute terms.

Data is not available for sector-wise mutual fund exposure before August 2009, when the equity funds had deployed Rs 22,587 crore (12.73 per cent) in the banking sector.

Mutual funds had pumped in Rs 38,668 crore in the banking shares at the end of October, while their exposure in the sector was at 19.72 per cent of AUM.

Market experts believe that the passage of the banking bill by Parliament along with expectations of rate cuts by the Reserve Bank early next year have made equity fund managers raise their exposure to this sector.

In 2012, exposure of equity fund managers to banking stocks rose from 17.23 per cent of total assets under management in January to 20.59 per cent in November. In absolute terms, funds infusion has grown from Rs 32,380 crore to Rs 42,022 crore.