Mutual funds’ allocation for bank stocks slumped to Rs 82,000 crore at the end of July, after touching a record high in the preceding month. Prior to that, fund managers have been raising their allocation to banking shares since February. Although, they had trimmed exposure to the sector between November and January due to higher bad loans.
Experts have attributed the trim in allocation to banking stocks to mounting bad loans of public sector banks. However, due to sheer size of financial sector in India, MF exposure to this sector is still the highest as compared to others such as auto and software and also because in the long run, finance/banking is a major part of the growth story which is India, they added.
In percentage terms, exposure to banking stocks fallen to 19.86 per cent of equity AUM in last month as against 20.4 per cent in June. The overall deployment of equity funds in bank stocks stood at Rs 82,042 crore at the end of July compared with Rs 93,885 crore in June-end, as per data available from the Securities and Exchange Board of India (Sebi).