 "Equity MFs take liking to state-owned banks")
Stocks of public sector banks (PSBs) are finally finding some favour among equity fund managers.
With several government measures to help these banks and clarity emerging about their growth prospects in the coming quarters, fund managers were seen investing in select PSBs last month, after avoiding state-owned banks for nearly two years. State Bank of India (SBI), Punjab National Bank (PNB) and Union Bank of India are the prominent names here, with Rs 800 crore being invested in these stocks by fund managers, amid a sharp rally in these counters.
In fact, SBI was the second-most bought stock by fund managers in June. Its stock price in the past month made a decisive surge beyond Rs 200, where it couldn't go beyond for long. The price, after a 52-week low of Rs 148 early this year, is up 11 per cent since May-end and closed at Rs 227.20 on Wednesday.
"You can't do away with SBI. If it's not in our portfolio, we are missing on India's economic growth. It was not that we did not have it; we had a 'hold' call on it as we waited for concrete clarity to emerge. We added quite a lot in June and any correction (fall in price) will be a buying opportunity," said the equity head of a large fund house.
Among fund mangers, Prashant Jain, chief investment officer (CIO) of HDFC MF, was among the few to continue with his conviction on the counter. About 7.5 per cent or Rs 2,160 crore of the total collective assets of two of his schemes, HDFC Equity and HDFC Top 200, is in SBI.
Other schemes with higher exposure to SBI are Reliance Equity Opportunities Fund, Franklin India High Growth Companies Fund and Reliance Vision Fund.
PNB, the highest gainer in stocks since May, is the second most preferred PSB among large banks. Its share price has surged 58 per cent in six weeks, from Rs 80 to Rs 125. Fund managers accumulated nearly 11 million of PNB shares, pumping Rs 116 crore in the counter.
"PNB was punished by the market. Fund managers, in general, had lost hope on it. This bank caught up late against peers like SBI. We took a conscious 'buy' call on PNB, as we understand the bank is likely to do exceptionally well in the next three quarters," said a CIO.
Schemes with exposure to PNB are ICICI Prudential Value Discovery Fund, HDFC Mid Cap Opportunities Fund, Franklin India Bluechip Fund and ICICI Prudential Select Large Cap Fund, among others.
Given the recent rally in banking stocks, banking equity schemes have emerged as star performers during the past quarter. The category average return of these schemes is 20.4 per cent, among the highest across equity schemes. During this period, the BSE exchange's benchmark Sensex returned 4.3 per cent and the BSE Bankex was up 6.1 per cent.
