MFs betting max on bank stocks; IT comes a poor second

Mutual funds seem to be betting on banking stocks, as its equity exposure to the banking sector climbed to an all-time high of over Rs70,000 crore in November.

Although this happened amid a market rally, it also marks the second consecutive rise in MFs' exposure to banking stocks. MFs are investing in securities such as stocks, bonds, money market instruments and similar assets.

Their investments in banking stocks stood at Rs70,575 crore as of 30 November, accounting for 21.23 per cent of their total equity assets under management (AUM) of Rs3,32,000 crore, according to data from the Securities & Exchange Board of India.

The previous high was October this year when investment in the sector surged to Rs62,718 crore.

MFs had been raising their exposure to banking shares since January but their investment level in the sector dropped in September. The industry again increased the exposure in October and the momentum continued in November. The fund infusion has grown from Rs30,339 crore in January to Rs70,575 crore in November.

Software was the second-most preferred sector with MFs last month, with an exposure of Rs34,674 crore, followed by pharmaceuticals (Rs22,654 crore), auto (Rs20,824 crore) and finance (Rs19,133 crore).

According to market participants, the ongoing market rally might see mutual fund assets getting diversified.

The banking index (Bankex) shot up by nearly 8.75 per cent in November this year, while the 30-scrip BSE Sensex rose three per cent.

In percentage terms, exposure has risen from 16.6 per cent to 21.23 per cent during the period.