MFs’ exposure to banks fall 21.6K- cr

New Delhi, Oct. 21: Mutual funds’ holding of banking stocks declined by over ` 21,600 crore to ` 1.88 lakh crore in September, driven by the correction in markets.

Overall deployment of equity funds in bank stocks stood at ` 1,88,620 crore at the end of September as compared to ` 2,10,251 crore in the preceding month, as per data available from Sebi.

This was the lowest level of deployment since June, when equity funds’ exposure to bank stocks stood at ` 1.87 lakh crore. In May, it was at ` 1.89 lakh crore.

In percentage terms, exposure to banking stocks was at 19.78 per cent of equity AUM last month as against 20.21 per cent in August.

“The fall in mutual fund ( MF) exposure to banks is more driven by market correction than by any significant reduction by mutual funds. In fact MFs have more or less maintained their exposure in banks compared with six months ago ( 19.78 per cent in April) adding select banks,” said Viday Bala, head, MF research, at FundsIndia. com.

“The reduced exposure is more driven by lower market value of their holdings due to the current market correction,” she added.

The BSE bankex index slumped by 12 per cent during the period under review, while the benchmark Sensex witnessed a drop of a little over 6 per cent. Despite the current decline, banking is the most preferred sector with fund mangers as they cannot take a bearish call on banking stocks, given the high weightage attached to the index.