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Mutual funds seem to have taken a shine to the stocks of State Bank of India and ICICI Bank in the fourth quarter ended March 31, 2017.
Mutual funds upped their stake in SBI from 7.88 per cent in the third quarter ended December 31, 2016 to 8.42 per cent in the fourth quarter ended March 31, 2017.
In the case of ICICI Bank, MFs increased their shareholding from 16.83 per cent in the third quarter to 20.04 per cent in the fourth quarter.
According to a mutual fund advisor, SBI is on the MFs radar as the acquisition of five associate banks and the Bharatiya Mahila Bank has given it more heft, leading to expectations of improvement in efficiency of operations and productivity, and a further increase in retail business due to the expanded branch network.
The fund advisor observed that MFs may be betting on ICICI Bank due to its sustained thrust on retail advances, focus on lending to better rated corporates, and the buzz in the market that it may be looking at acquiring a smaller private sector bank.
Further, both banks are seen actively resorting to the Insolvency and Bankruptcy Code for resolution of stressed assets. This Code provides for early identification of financial distress and resolution if the underlying business of the borrower is found to be viable.
Even as MFs upped their stake in SBI and ICICI Bank, Life Insurance Corporation of India, cashed in on the buoyancy in banking stocks and pared its stake in these two banks. Typically, LIC looks for opportunities to generate surplus by churning its investments in the last quarter in order to declare bonus for its policyholders.
LIC’s shareholding in SBI came down from 9.62 per cent in the third quarter to 8.96 per cent in the fourth quarter. Similarly, the life insurer cut its stake in ICICI Bank from 14.65 per cent to 13.99 per cent. The buoyancy in banking stocks is underscored by the fact that the benchmark NIFTY Bank Index, comprising 12 bank stocks, jumped from 17,969.60 to 21,444.15 in the fourth quarter.
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