MFs raise bank stock exposure to Rs 85,330 crore in April

Mutual funds raised allocation for banking stocks to Rs 85,330 crore in April, primarily on account of cheaper valuations. Fund managers had trimmed allocation to banking stocks between November and January, lowering exposure by Rs 9,000 crore due to higher bad loans. “The recent focus in clean-up of the Indian banking systems by the RBI and government by rightly recognising NPAs to start with has beaten down banking stocks,” Wealthforce.com founder Siddhant Jain said. “Most of the PSUs and private sector banks are now available at cheaper valuation, which has probably resulted in MF increasing their exposure to the banking sector. We are in the early stages of the next Indian growth story and banking as a sector will definitely benefit from the same,” he added. 

In percentage terms, exposure to banking stocks was at 20.26 per cent of equity AUM last month as against 19.92 per cent in March. Overall deployment of equity funds in bank stocks stood at Rs 85,330 crore at the end of April as compared with Rs 82,196 crore in the preceding month, as per the data available from Securities and Exchange Board of India (Sebi). It stood at Rs 78,644 crore at the end of January. The industry’s exposure to banking sector was at Rs 85,376 crore, Rs 88,000 crore and Rs 85,306 crore in October, November and December respectively.