New Delhi: Mutual funds reduced their holdings in banking stocks by 2.4 percent in May compared to that in the previous month.
The investment in banking stocks was 20.1 percent of mutual funds' (MF) total equity assets under management (AUM) of Rs 1.87 lakh crore in May, according to Sebi data.
Mutual funds' investment in banking shares was at Rs 38,572.41 crore at April-end, which was 20.84 percent of the industry's total AUM.
This marks a steep decline from Rs 43,659 crore parked in banking shares in December 2012. In terms of percentage too, MF exposure to banks had fallen from its peak level of 21.40 per cent seen at the end of January.
Market participants attributed the decline in investment in banking shares to overall volatility in equity market.
Banking is the only sector to log double digit exposure. Software is the second most preferred sector with MFs having 9.39 percent exposure, followed by consumer non-durables (7.53 percent) and pharmaceuticals (7.48 percent).
Mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.
In 2012, there was a consistent growth in investment in banking stocks by the industry's equity fund managers and their exposure has risen from 17.23 percent of total AUM in January 2012 to 21.15 percent in December.
In absolute terms, fund infusion has grown from Rs 32,380 crore to Rs 43,659 crore. The increase in allocation by fund managers to the banking sector could be attributed to interest rates declined during the year.
In May, banking was followed by software sector which attracted Rs 17,587 crore or 9.39 percent of AUM, consumer non durables witnessed a deployment of Rs 14,109 crore or 7.53 percent of the AUM.
Pharma saw an investment of Rs 14,010 crore or 7.48 percent of AUM and finance witnessed an investment of Rs 10,849 crore or 5.79 percent of AUM.