Mutual funds increase bet on banking stocks

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MFFund managers exposure in banking stocks rose to a six-month high of over Rs. 34,000 crore in December due to a rise in equity markets and various steps taken by the RBI to prop the banking sector.

According to the latest data available with market regulator Sebi, mutual fund investments in banking stocks in December 2013 reached Rs. 34,153 crore, accounting for 17.66 per cent of their total equity assets under management (AUM) of Rs. 1.93 lakh crore.

This was the highest level since June 2013, when fund managers had shored up their investment in banking stocks to Rs. 35,442 crore.

In November 2013, mutual funds’ exposure in banking stocks was at Rs. 32,417 crore.

Market participants said mutual funds have shown interest in banking stocks during the September-December period, primarily on account of measures announced by the RBI coupled with overall surge in the stock market.

The banking index (bankex) surged 2.13 per cent in December, while the 30-scrip BSE sensitive index (Sensex) rose 1.82 per cent.

In September, new RBI Governor Raghuram Rajan took steps to stabilise the rupee and also announced various measures to liberalise the banking system, including higher overseas borrowing limits for lenders and simpler processes for opening branches.

The banking sector was followed by IT, where mutual fund investments stood at Rs. 26,762 crore. Pharma stocks accounted for Rs. 15,603 crore, while consumer non-durables attracted Rs. 13,186 crore and petroleum segment Rs. 10,045 crore.