Equity MFs bet big on public sector banks

CHENNAI: Public sector banks (PSBs) may be facing an increase in stressed assets. But that hasn’t stopped equity mutual funds (MFs) from betting big on PSB scrips. The exposure of fund houses to public sector bank stocks increased by 18.7% quarter-on-quarter (q-o-q) in value terms to 18,179.6 crore at the end of June.

Incidentally, the value of MF holdings in private sector banks grew 13.3% q-o-q to 75,512.9 crore during the period. Equity MF holdings in banking scrips touched an all-time high of 93,885 crore or 20.4% of the assets held by fund houses at the end of June, data with market regulator Sebi showed.

State Bank of India (SBI), the country’s largest lender, was among the stocks that saw the highest increase in exposure in quantity terms during April-June. MFs added about 3.15 crore SBI shares, or around 7% q-o-q increase, to their holdings during the quarter. Fund houses held nearly 48.6 crore SBI shares at the end of June.

The value of SBI shares held by MFs surged 20.5% q-o-q to 10,625.4 crore during the period, data compiled by HDFC Securities showed. Canara Bank and Syndicate Bank emerged as favourites for fund houses. MFs bought about 5.4 lakh shares of Canara Bank, a whopping 1,200.6% q-o-q jump.

Fund houses held just 45,000 shares of the bank at the end of March. Similarly, equity MF holdings in Syndicate Bank jumped nearly 10 times to about 91.9 lakh shares at the end of June. They also purchased 3.78 lakh shares of Bank of Baroda during the period.

Equity MFs are also bullish on financial services companies. The value of investments held by fund houses in financial services firms zoomed 40% q-o-q to 18,345.3 crore at the end of June. The overall exposure of fund houses to stocks of banks and financial services firms stood at 1,25,378 crore or 27.24% of the assets held by equity MFs in June, the highest in percentage terms in the last one year.

HDFC Bank continues to remain the most favoured stock for equity MFs. In all, 583 equity MF schemes held HDFC Bank, which was followed by Larsen and Toubro (403) and SBI (370).


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