Mutual Funds' Exposure to IT Stocks Soars to 19,000 Cr; A 42-Month High

Monday, April 1, 2013
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New Delhi: The mutual fund industry is betting big on the software sector with equity exposure at over Rs.19,000 crore the highest amount in three and a half years.

According to latest data available with the market regulator Sebi (Securities and Exchange Board of India), mutual fund investment in the software stood at Rs.19,124 crore, which was 10.44 per cent of the industry’s total equity assets under management (AUM) of Rs.1.83 lakh crore.

This is the highest exposure to software sector since at least August 2009 in absolute terms and the second-highest in percentage terms.

The funds’ sector-wise exposure data is not available before August 2009, when equity funds had invested Rs.11,913 crore (6.73 per cent of total funds) in the software sector.

In percentage terms, the mutual fund industry had the highest exposure of 10.50 per cent to the software space in December 2011.

Market participants attributed mutual funds’ inclination towards software segment to weakness in Indian currency coupled with good performance by IT companies. A weak rupee boosts vale of dollars earned by IT firms.

“The mutual fund industry have been investing in the software shares because of the weakness in rupee and smart quarterly numbers posted by companies such as TCS and Infosys among others,” Geojit BNP Paribas research head Alex Mathews said.

Another key factor was expectation of good order books from the U.S. companies, he said.

Banking stocks account for the highest exposure for mutual fund investors among all the sector and is the only other segment to log double-digit exposure. Mutual funds had 20.1 per cent exposure to banking stocks at the end of February 2013.

However, exposure to the banking space declined from their highest level of 21.40 per cent seen in January.

The absolute investments into banking shares also declined to Rs 36,812 crore in February, from Rs.42,760 crore in January.

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Source: PTI
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