Sunday, January 31, 2016

Mutual Funds remain bullish on IT stocks; exposure rises to Rs 42k cr

Mutual fund managers continued to be bullish on software companies as they raised their total allocation in the sector to around Rs 42,000 crore in December on depreciation in rupee.

In comparison, equity fund managers' deployment in software stocks stood at Rs 33,970 crore in December 2014.

Industry experts said that fund managers have been raising their allocation in software stocks due to declining rupee against the US dollar.

The rupee depreciated by 312 paise, or 4.95%, against the US dollar on heavy fund outflows last year. It has further slumped in new year and is currently hovering at Rs 68-level.

As per the data available with Securities and Exchange Board of India (Sebi), overall deployment of equity funds in software stocks stood at Rs 41,998 crore in December as compared with Rs 41,519 crore in the preceding month.

Further, equity fund managers' deployment in software shares was at Rs 41,816.74 crore in October. It stood at an all time high of Rs 43,053 crore in September.

Overall, fund mangers remained bullish on software stocks in the entire 2015. Fund managers' exposure increased from Rs 33,970 in December 2014 to Rs 42,000 crore in December 2015.

Exposure to software stocks was at 9.83% in December 2015 compared with 10.20% in December 2014.

Furthermore, IT was the second-most preferred sector with fund mangers after banks. Deployment of equity funds in traditional investment sectors like banking stocks was at Rs 85,306 crore during the period under review.

Among others, MFs have an exposure of Rs 35,006 crore in pharmaceuticals, followed by auto (Rs 28,519 crore) and finance (Rs 24,976 crore).

The BSE IT index grew 4.5% last year while the BSE Sensex fell by 6%.

MFs are investment vehicles made up of a pool of funds collected from a large number of investors and invest in stocks, bonds and money market instruments, among others.

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