Mutual Fund managers seem to be bullish on bank shares as they raised their allocation in the sector to an all time-high of over Rs 88,000 crore in November. In comparison, equity fund managers' deployment in banking stocks stood at Rs 70,575 crore in November 2014.
Industry experts said that fund managers raised their allocation to banking stocks, especially private banks which have consistently beaten their public sector peers in performance and have lower non-performing assets (NPAs).
Banking stocks have high weightage in the BSE index, Sensex. They added that fund managers can not take a bearish call on banking stocks, given the high weightage attached to the index. As per the data available with Securities and Exchange Board of India (Sebi), overall deployment of equity funds in bank stocks stood at Rs 88,000.61 crore in November compared with the previous high of Rs 85,376 crore in the preceding month.
Besides, exposure to bank stocks was at 20.92 per cent against 20.67 per cent in the preceding month. The BSE bankex index inched up 0.72 per cent in November, while BSE Sensex witnessed a drop of 1.2 per cent. Apart from that, IT was the second-most preferred sector with fund mangers after banks with an exposure of Rs 41,519 crore, followed by pharma (Rs 32,521 crore), auto (Rs 29,776 crore) and finance (Rs 24,422 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.
BSE asks MF houses to provide FATCA details of client
Mutual Fund houses will have to mandatorily provide compliance details for the new global tax avoidance law FATCA with regard to each client on the stock exchange’s mutual fund trading platform. In a circular, BSE said for each and every transaction mutual fund houses have been asked “to upload FATCA details of the client.” BSE has a mutual fund trading platform, BSE STAR MF. It became operational for transactions in mutual fund schemes for all investors in December 2009. Under the FATCA (Foreign Account Tax Compliance Act) of the US, India and other signatory countries have agreed that all their financial institutions will follow enhanced KYC (Know Your Client) procedures to identify accounts of the US and other foreign taxpayers on an annual basis. Earlier, fund houses were asked to mandatorily provide additional KYC informations pertaining to gross annual income and net worth of new investors by November 1, as also their ‘beneficial ownership’ details. Further, funds have been asked to make focused and sustained efforts to obtain the missing KYC information from existing investors or complete the ‘in person verification’ requirements by December 31 to ensure that KYC obligations are met but without causing inconvenience to bona-fide investors. In case investors fail to adhere to the norms, fund houses have been asked to reject all purchase and switch transactions.