Fund houses are increasing their exposure to banking sector stocks in the face of a tanking Sensex and bleak opportunities in equity markets. As per an analysis by Sharekhan, a stock-broking firm, several fund houses increased their exposure to banking sector stocks in the month of July. They are either picking up value-based stocks or are maintaining cash assets.
J Venkatesan, fund manager, equity, Sundaram BNP Paribas said, ?The major reason fund houses are looking at banking sector stocks is because their valuation is very attractive in the current situation, where the markets are very volatile. Even though the banking sector is volatile too, we expect excellent returns from banking stocks in the long term.?
Fund houses have increased their holdings for mid-cap funds in the month of July in State Bank of India, Axis Bank, Bank of Baroda, Union Bank of India and Kotak Mahindra Bank. Banking stocks worth Rs 171.68 crore were added in the holdings of mid-cap fund portfolios.
Apart from banking stocks, fund houses are also investing in companies like Reliance Infrastructure, Hero Honda Motors and Hindustan Petroleum Corporation for their mid-cap funds. Though all these companies have been battered severely, overall they have a strong business outlook. Other fund house favourites are Adlab Films, Indian Oil Corporation, Cairn India and Oriental Bank of Commerce.
The Sharekhan analysis also states that schemes such as UTI Long Term Advantage Fund-Series II, Birla Sun Life Pure Value Fund, LIC MF Growth, Reliance Natural Resources Fund and ICICI Prudential Blended Plan hold more than 30% in cash and are waiting for right valuations to invest.