Mumbai: Mutual fund managers have aggressively cut down their holdings in bank and financial sector stocks over the last one-year amid serious concerns regarding the rising non-performing loans in the banking system. During the same time, fund houses have upped their stakes in software and pharma sectors.
The data available with Sebi showed that mutual funds stake in banks have dropped to 19.24 per cent as at the end of January 2016 from 21.39 per cent reported during the same period last year. Market participants said the rising delinquencies in the banking system along with a subdued credit growth amid weakness in private sector investment had forced fund managers to rework their investment strategies.
“Investors have trim-med their exposure to bank and financial sector stocks. Over the last few quarters, we have seen investors preferring more defensive sectors like IT and pharma,” pointed out Uday Narayan Dubey, vice-president, institutional desk at R.K.Global.
“Bank stocks are considered as the proxy to domestic economic growth, which has not picked up momentum as expected. Private sector investment is yet to see a revival due to which the credit growth in the banking sector has remained subdued. Further, the banking system is also grappling with the issue of high NPAs. This has resulted in investors turning little cautious towards the banks,” he added.
