MF exposure to bank stocks hits record high of Rs 55k cr in July

Software is the second most preferred sector, followed by pharmaceuticals, auto and finance

Mutual fund managers raised their exposure in bank stocks to a fresh all time high of over Rs 55,000 crore in July this year amidst soaring equity market.

According to the latest data available with market regulator Sebi, mutual fund (MF) investments in banking stocks reached Rs 55,086 crore as on July 31, accounting for 21.07 per cent of their total equity assets under management (AUM) of Rs 2.61 lakh crore.

This also marks the sixth consecutive monthly rise in exposure to such stocks.

After banking, software is the second most preferred sector with MFs having exposure of Rs 27,596 crore, followed by pharmaceuticals (Rs 17,542 crore), auto (Rs 14,441 crore) and finance (Rs 14,359 crore).

At current levels, the MF industry has the highest exposure to banking sector since August 2009. Data is not available for sector-wise exposure before August 2009, when the equity funds had deployed Rs 22,587 crore (12.73 per cent) in banking shares.

The previous high was in June this year when investment in the sector rose to Rs 54,746 crore.

Mutual funds are investment vehicles made up of a pool of funds collected from a large number of investors. MFs invest in stocks, bonds, money market instruments and similar assets.

According to market participants, MFs have been showing interest in banking stocks since the beginning of the year amidst rising equity market.

Meanwhile, the banking index (Bankex) remained flat to end at 17,485.61 points in July this year, while the 30-scrip BSE Sensex rose two per cent to end at 25,894.97 during the period.

The year 2014 has seen a consistent growth in investment in banking stocks by equity fund managers and their exposure has risen from 16.6 per cent of total AUM in January to 21.07 per cent in July.

In absolute terms, fund infusion in such stocks has grown from Rs 30,339 crore to Rs 55,086 crore during the month.