Data released on SEBI's website revealed that 43 mutual funds had invested Rs 274,724 crore in bank stocks in May.
Mutual funds continue to prefer bank shares in May, seeing good growth outlook, profitability and capital ratios, data released by the Securities and Exchange Board of India (SEBI) showed.
The funds deployed 24.46 percent of their equity assets under management (AUM) into the banking sector, the highest allocation to any sector and the next-best sector fund houses ploughed money into was financials.
Data released on SEBI's website revealed that 43 mutual funds had invested Rs 274,724 crore in bank stocks in May. The numbers of April were at 23.62 percent or 257,757 crore.
A year ago, in May 2018, mutual funds had invested Rs 189,559 crore, or 19.99 percent of equity AUM in bank shares.
Mutual fund managers attributed the increased allocation of bank shares to good growth outlook and profitability.
Generally, banking is the most preferred sector with fund managers as they cannot take a bearish call on the banking sector, given the sector’s 35 percent weight in the S&P BSE index.
After banks, finance was the second-most preferred sector with fund managers. Equity fund managers’ deployment in finance stocks was at Rs 107,251 crore, followed by software (Rs 95,367 crore), consumer non-durables (Rs 80,237 crore) and petroleum (Rs 62,065 crore).
“Though corporate banks earnings somewhat disappointed for the fourth quarter, the miss was driven by rising coverage ratios. Slippages moderated and FY20 earnings were actually upgraded,” said a fund manager from a private fund house.
According to most fund managers, life insurance and general insurance companies offered promising opportunities due to high growth driven by low penetration and increasing financialisation of savings.Fund houses were upbeat on the IT sector given the increased investments in the front end, UI (User Interface) and cloud migration which is driving the demand for companies.The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .