MFs hike exposure in banking sector to 20%

Tags: Mutual Funds
The mutual fund industry is betting big on 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 the market regulator Securities and Exchange Board of India (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 2,04,000 crore.

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

At current levels, the mutual fund industry’s exposure to banking sector is highest since at least August 2009, both in terms of percentage as well as in absolute terms.

The 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 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 the AUM.

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

“We have been seeing a steady rise in investment in bank shares in the past three months by mutual funds on expectation of a reduction in key short-term lending rate by RBI in January and passage of the banking (amendment) bill, which would pave the way for entry of more players and investments in the sector, have given a further boost,” Destimoney Securities MD and CEO Sudip Bandhopadhyay said.

The year 2012 has seen a consistent growth in investment in banking stocks by the industry’s equity fund mangers and their exposure have risen from 17.23 per cent of total AUM 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.

In November, banking was followed by software sector, which attracted Rs 17,745 crore, or 8.7 per cent, of AUM, consumer non durables (Rs 16,387 crore, or 8.03 per cent) and pharma (Rs 5,689 crore, or 7.69 per cent).

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Amit Shah deserved to be crowned President of India, some say

    The Bharatiya Janata Party is now firmly in the hands of Modi’s alter ego, which in plain English means ‘another side of oneself, a second self’

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Arun Nigavekar

Necessary yet inadequate boost to education

The finance minister, in the very first minutes of his ...

Zehra Naqvi

We must overcome the fear of death

It is the biggest irony that the only thing that’s ...

Dharmendra Khandal

Jawai leopards and locals can coexist peacefully

At first glance, the Jawai landscape seems like a large ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture