 "Equity fund managers trim position on bank stocks")
India's equity mutual fund managers have reversed their gears on banking stocks. The continuous unabated shopping of bank shares for most part of the second half of FY13 in anticipation of interest rates seems to be over for the time being.
For the first time in last six months, fund managers reduced their allocation to bank stocks in February. The exposure of fund industry's equity assets to banks squeezed by 130 basis points (one basis point is hundredth of a percentage point). This is a far sharper cut than the quantum of rise industry witnessed in the past few months.
And rightly so. With bank shares starting to crack during the month and banking index witnessing almost double the erosion than the benchmark indices, fund managers chose to trim their positions. For instance, BSE Bankex lost 9.45% or close to 1,400 points while Sensex declined 5.2% in February.
Swati Kulkarni, executive vice president and fund manager at UTI Mutual Fund, says, "Outlook for the banking sector depends on revival in perception of inflationary pressures and GDP growth."
According to sector's investment managers, market had been expecting speeder action from the central bank on rate cuts.
Somehow, that did not happen and bank counters were hit hard, they add. According to the data available from markets regulator Securities and Exchange Board of India (Sebi), overall allocation to banks in February stood at 20.1% against 21.4% in the previous month.
Kaushik Dani, equity head at Peerless Mutual Fund, says, "Market had been anticipating cuts in interest rates for quite some time. Under this anticipation, industry was buying heavily in bank shares. But rates did not move southwards as fast as was anticipated and slight trimming of position on banking stocks followed."
The overall deployment of equity funds in bank stocks stood at Rs 36,812.31 crore in February against Rs 42,759.76 crore in January. Fund managers add that on banks they cannot take a bearish call given the high weightage in the indices. According to them, since asset under management (AUM) in banks are marked-to-market, fall in share prices also contributed in reduction of assets.
On the other hand, fund managers continued to bank heavily on IT stocks. Exposure in IT sector jumped 124 basis points to 10.44%. On the back of revival in US economy, which augurs well for the Indian IT industry, fund managers chose to add fresh position. Whereas on the defensives - pharmaceuticals and fast moving consumer goods (FMCG), they remained more or less neutral during the month.
For the first time in last six months, fund managers reduced their allocation to bank stocks in February. The exposure of fund industry's equity assets to banks squeezed by 130 basis points (one basis point is hundredth of a percentage point). This is a far sharper cut than the quantum of rise industry witnessed in the past few months.
And rightly so. With bank shares starting to crack during the month and banking index witnessing almost double the erosion than the benchmark indices, fund managers chose to trim their positions. For instance, BSE Bankex lost 9.45% or close to 1,400 points while Sensex declined 5.2% in February.
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The country's banking giants - including private as well as PSU ones - witnessed the carnage with value erosion of as high as 19%. Shares of ICICI Bank and Axis Bank lost between 10 and 13% while those of state-owned banks - SBI, Bank of Baroda and Punjab National Bank were hammered anywhere between 13 and 20%.
Swati Kulkarni, executive vice president and fund manager at UTI Mutual Fund, says, "Outlook for the banking sector depends on revival in perception of inflationary pressures and GDP growth."
According to sector's investment managers, market had been expecting speeder action from the central bank on rate cuts.
Somehow, that did not happen and bank counters were hit hard, they add. According to the data available from markets regulator Securities and Exchange Board of India (Sebi), overall allocation to banks in February stood at 20.1% against 21.4% in the previous month.
Kaushik Dani, equity head at Peerless Mutual Fund, says, "Market had been anticipating cuts in interest rates for quite some time. Under this anticipation, industry was buying heavily in bank shares. But rates did not move southwards as fast as was anticipated and slight trimming of position on banking stocks followed."
The overall deployment of equity funds in bank stocks stood at Rs 36,812.31 crore in February against Rs 42,759.76 crore in January. Fund managers add that on banks they cannot take a bearish call given the high weightage in the indices. According to them, since asset under management (AUM) in banks are marked-to-market, fall in share prices also contributed in reduction of assets.
On the other hand, fund managers continued to bank heavily on IT stocks. Exposure in IT sector jumped 124 basis points to 10.44%. On the back of revival in US economy, which augurs well for the Indian IT industry, fund managers chose to add fresh position. Whereas on the defensives - pharmaceuticals and fast moving consumer goods (FMCG), they remained more or less neutral during the month.