Mutual funds exposure to bank hits record-high of Rs 55,000 crore

India’s leading mutual funds shuffled their holdings in June, lapping up shares of beaten sectors such as technology and banks, while dumping those with hazy short-term prospects.

Top six mutual funds including HDFC AMC, ICICI Pru AMC, Reliance MF, Birla Sun Life AMC, UTI AMC, and SBI Funds, which together manage 60 per cent of the industry’s total assets under management of around Rs 10 lakh crore, bought shares of leading banks like SBI, ICICI Bank and HDFC Bank. Mutual funds’ exposure to the banking sector hit an all-time high at Rs 55,000 crore in the month.

These asset managers picked up technology shares such as TCS and Infosys, which had been underperformers due to concerns over a strenghtening rupee. Three out of the six mutual funds pressed the sell button on Reliance Industries after the government deferred its decision to increase natural gas prices by three months. Three funds also sold ITC ahead of the Union Budget on concerns over higher taxes on cigarettes.

United Spirits was another notable exit from the portfolios of Reliance Mutual, UTI Mutual and SBI Mutual during the month. Diageo’s open offer to public shareholders of United Spirits to acquire an additional 26 per cent stake at Rs 3,030 per share has closed on June 19. It is not clear whether these funds have tendered the shares in the open offer. Sources said many funds, outside this list, sold the shares in the open market as they were not sure if all their holdings would be accepted.