Markets

MFs exposure to bank stocks jump to Rs 26,838 cr in Sept

PTI New Delhi | Updated on November 05, 2013

Cashing in on the good equity market conditions, fund managers have raised their exposure to bank stocks to more than Rs 26,800 crore in September over the preceding month.

According to the latest data available with SEBI, the mutual fund (MF) industry’s investment in bank stocks stood at Rs 26,838 crore as on September 30, 2013 accounting for 15.75 per cent of their total equity assets under management (AUM) of Rs 1.7 lakh crore.

In August, mutual funds’ exposure to bank stocks had touched Rs 22,744 crore — the lowest level in four years. However, the investment had risen to as high as Rs 43,659 crore in December 2012.

Market participants attributed the increase in investment in bank shares to measures announced by the Reserve Bank of India (RBI) chief Raghuram Rajan coupled with overall surge in the stock market.

Bank stocks climbed in September, after falling for four consecutive months, on value buying and a slew of measures announced by RBI.

During September, the banking index (Bankex) surged 6.4 per cent, while the 30-scrip sensitive index (Sensex) rose four per cent.

Rajan had in September announced steps to stabilise the Indian currency and liberalise the banking system, including higher overseas borrowing limit for lenders and simpler processes for opening branches.

Mutual funds are an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.

In 2012, there was consistent investment growth in banking stocks by the industry’s equity fund managers and their exposure had risen from 17.23 per cent of the total AUMs in January 2012 to 21.15 per cent in December.

The increase in allocation of funds to bank stocks in 2012 was largely attributed to declining interest rates.

In September 2013, banking sector was followed by software space where the mutual funds’ investment stood at Rs 23,797 crore. While the consumer non-durables accounted for Rs 13,921 crore, pharma stood at Rs 14,444 crore and petroleum products at Rs 9,933 crore.

Published on November 05, 2013

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