Mutual funds’ exposure to banking stocks at 3-month low

• HDFC
• 24 Oct 2018
• Knowledge Centre

HDFC, Tester

Largely owing to the correction in equity markets, the portion of banking stocks in mutual funds’ holdings dipped by over Rs 21,600 cr to Rs 1.88 lakh cr in September 2018.

 

A leading wire service has quoted Ms. Viday Bala, Head of Mutual Fund Research at FundsIndia.com as saying, “The fall in mutual fund (MF) exposure to banks is more driven by market correction than by any significant reduction by mutual funds. In fact, MFs have more or less maintained their exposure in banks compared with six months ago (19.78% in April).”

 

According to the report, the overall deployment of equity funds in bank stocks stood at Rs 1,88,620 cr at the end of September 2018 as compared to Rs 2,10,251 cr in the preceding month, as per data available from the Securities and Exchange Board of India (SEBI). This was the lowest level of deployment since June 2018 when equity funds' exposure to bank stocks stood at Rs 1.87 lakh cr. In May 2018, it was at Rs 1.89 lakh cr. In percentage terms, exposure to banking stocks was at 19.78% of equity AUM in Sept-18 as against 20.21% in Aug-18.

 

The BSE Bankex index slumped by 12% in the periods under review, while the benchmark Sensex witnessed a drop of a little over 6%. Despite the current decline, banking is the most preferred sector with fund managers as they cannot take a bearish call on banking stocks, given the high weightage attached to the index. After banks, finance was the second-most preferred sector. Equity fund managers' deployment in finance software stocks was at Rs 87,519 cr, followed by software (Rs 88,453 cr), consumer non-durables (Rs 71,072 cr) and auto (Rs 46,920 cr). If you're tracking mutual fund performance or planning your own investment strategy, the SIP Calculator can help estimate returns and plan investments more effectively.