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Mutual Fund managers have been on a shopping spree of bank shares as they have raised their allocation in the sector to about Rs 75,000 crore in April anticipating a rate cut by the Reserve Bank.
In comparison, equity fund managers' deployment in banking stocks stood at Rs 41,104 crore in April 2014.
According to the industry experts, fund managers have raised their allocation to bank stocks expecting a rate cut by the RBI.
They said that fund managers cannot take a bearish call on banking stocks, given the high weightage attached to the index.
As per the data available from Securities and Exchange Board of India (Sebi), overall deployment of equity funds in bank stocks stood at Rs 74,810 crore in April compared with Rs 73,575 crore in the previous month.
Besides, exposure to banks was at 20.7 per cent against 20.42 per cent in the preceding month.
The BSE bankex index inched up 0.8 per cent in April, while the benchmark Sensex witnessed a drop of 3.4 per cent.
Besides, IT was the second-most preferred sector with fund mangers after banks with an exposure of Rs 34,100 crore, followed by pharma (Rs 27,587 crore), auto (Rs 24,544 crore) and finance (Rs 22,425 crore).
MFs are investment vehicles made up of a pool of funds collected from a large number of investors and invest in stocks, bonds and money market instruments, among others.
