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 the latest data available with the Securities and Exchange Board of India (SEBI), the 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.
Data are 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 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 Parliament along with expectations of rate cuts by the Reserve Bank of India early next year has 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 last three months by mutual funds on expectation of a reduction in key short-term lending rate by the 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 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 the software sector which have 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).
