Indian mutual fund industry has invested heavily in the banking and pharma stocks in the month of September, 2009 given the strong credit offtake, especially after stronger industrial production. At the same time, they have started to reduce their exposure to the telecom sector fearing that the recent price war between the telecom companies and slower subscriber growth might have negative impact on the earnings of the players in the sector.
According to the data complied by Sharekhan, fund houses increased their exposure in banks stocks to Rs 2,014.99 crore in September compared to Rs 1,869.18 crore invested in August. Gopal Agrawal, head-equity, Mirae mutual fund says, ?It was believed that banks will post strong results for the second quarter and from the next year onwards they would start credit-offtake. This is the major reason why fund houses have invested more in banking stocks. Apart from that, pharmaceuticals sector in general is providing better returns, so we saw some inflows in that sector.?
Pharmaceuticals and biotechnology stocks saw inflows of Rs 798.02 crore in September, compared to Rs 782.05 crore in August.
BSE Bankex, the banking index surged by 19.05% or 1,577.11 points in the month of September. Recently, HDFC Bank posted 30.2% increase in net profit at Rs 687 crore for the quarter ended September 2009 against Rs 538 crore in the corresponding period of the previous year. Dealers in the market say ICICI Bank and State Bank of India (SBI) might also come out with strong quarter earnings numbers.
Dhirendra Kumar, CEO, Valueresearch online said, ?Overall markets have gone up in September, however, banking sector is economy proxy sector so when we receive some positive news from the economy we witness surge in these stocks. In Pharma stocks the valuations were attractive and that is one of the reason there is been inflows in that sector.?
The exposure of telecom stocks was reduced to Rs 559.47 crore in September from 678.01 crore in August. Oil & Gas also saw fall as fund houses invested Rs 2,082.77 crore in August which came down to Rs 1,924.99 crore in September, says the Sharekhan report.
A senior equity analyst from the leading fund house said, ?Exposure in Oil & Gas sector was declined only because several fund houses had reduced holding in RIL ahead of Supreme Court hearing in the RIL-RNRL case, which might have impacted Reliance stocks in September.?