The banking sector continued to be the most favoured of mutual fund (MF) managers at the beginning of the second half of the financial year.
MFs’ exposure to automobiles, industrial capital goods, construction projects and petroleum products also rose during the period.
“We are bullish on banking,” said Sunil Singhania, head of equities at the country’s largest fund house, Reliance MF. Of the total equity assets of Rs 2,03,702 crore, the industry’s investment in the sector was Rs 34,225 crore.
According to fund managers Business Standard spoke to, banks are a good play despite some downward movement in the stocks this month. “Banking is a safe bet. Non-performing assets are declining and banks’ earning is now coming from lending and borrowing businesses, which is a good signal,” said the chief investment officer at a mid-size fund house.
“The new leg of the rally will come from the infrastructure boom, of which the banking sector, in particular public sector banks, will be the main beneficiaries,” said the equity head of a mid-size fund house. The industry was positioning itself for growth in the capital goods and infrastructure sector, he added.
Navneet Munot, chief financial officer, SBI MF, said, “Private capex is likely to improve, which could boost industrial capital goods. In cement, too, there are specific stocks we are bullish on.”
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Compared with September, MFs’ exposure to industrial capital goods went up from 6.6 per cent to seven per cent to Rs 14,059 crore. In construction projects, the investment scaled up to three per cent of equity assets, at Rs 6,006 crore, as against 2.75 per cent in the previous month.
Cement, which was being avoided, seems to have gained some importance. The industry’s exposure in the sector has gone up to 2.44 per cent of its equity assets. “The turbulence of the last fortnight is likely to settle, as we believe that domestic equity markets bottomed out last week. Unless there is a global catastrophe, a sharp fall in equity markets is unwarranted,” said an equity head of a fund house.
Fund managers said large-cap information technology stocks and the real estate sector were also emerging as good bets.