MFs' exposure to software stocks dips to Rs 20,284 cr in Aug

Mutual fund managers' exposure to the software sector has dropped to Rs 20,284 crore at the end of August after touching a record high in the previous month.

According to latest data available with market regulator Securities and Exchange Board of India (Sebi), investment by the mutual fund industry in software stocks stood at Rs 20,284 crore as on August 31, accounting for 14.01% of their total equity assets under management (AUM) of Rs 1.45 lakh crore.

In comparison, the mutual fund exposure to software stocks was at an all-time high of Rs 22,009 crore in July.

Market participants attributed the decline in investment in software shares to profit booking and overall volatility in equity market.

Experts expect that fund mangers exposure to the software segment may decline in the coming months as well in case the upward movement of the Indian currency continues.

Mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.

During August, the IT index surged by 7.6%, while 30-scrip sensitive index (Sensex) dropped by 3.75%.

Investment growth in software stocks by the industry's equity fund managers has risen from Rs 18,381 crore in January to Rs 20,284 crore in August, which experts attributed to weakness in the Indian currency coupled with good performance by IT companies.

A weak rupee boosts earnings of technology firms in rupee terms as the sector derives a large share of revenue from exports.

In August this year, MFs had exposure of 15.7% to banking stocks, which was the highest among all sectors. Besides, MFs exposure to pharmaceuticals sector stood at 8.6%, consumer non-durables (7.44%), and petroleum products (6.19%).

In terms of absolute numbers, mutual funds investment to the banking space stood at Rs 22,744 crore, while pharma sector accounted for Rs 20,284 crore, consumer non-durables Rs 10,771 crore and petroleum products Rs 8,958 crore.