Mutual funds betting more on banking and financial services
The banking and financial sector has remained the favourite sector of fund managers. On analysis of data of mutual fund holdings at the end of December 2017, banking and financial sector stocks such as ICICI Bank and HDFC Bank were bought most in the last month of the 2017.
Domestic MFs pooled in a record Rs. 1.2 trillion in Indian shares in 2017, when BSE Sensex delivered ~28 per cent returns. According to the data from ACE MF, three of top five holdings are banking stocks which account nearly about 70 per cent of the holding out top five stocks holding. Moreover, among top 10 holdings of MF schemes, the five stocks are from the banking and financial sector. These nearly forms 59 per cent of the value of top 10 holdings.
The story of recovery of the Asia’s third largest economy and its tactical measures to encourage banking sector are major reasons which made this sector more attractive than before. Moreover, another main reason is the highest weightage of these stock on benchmark indices. These banking and financial sector stocks constitute around 40 per cent of the benchmark indices.
To analyse the weightage of these stocks in various schemes, we have analysed 550 odd mutual fund schemes, according to our analysis, HDFC bank remained at the top and second place is occupied by ICICI Bank. Among 550 schemes, 344 schemes has invested in HDFC Bank and ~Rs. 38,291 crore of investment is employed under this stock. While 332 schemes have invested in ICICI Bank which forms a corpus of around Rs. 26,270.5 crore. HDFC Limited also stood in the top 10 holdings with the Rs. 14,051.1 crore investment. The stock was largely bought by fund managers owing to low cost housing push by government. Among the top 20 holdings of the funds, 8 stocks are from the banking and financial sector which forms around 51 per cent value of the top 20 holdings. This clearly means that the fund managers are bullish on the finance stocks and expect the sector to outperform in the coming years.