Mutual fund managers continued to maintain bullish stance on software companies as they raised their total allocation in the sector to a fresh all time-high of over Rs 43,000 crore in September on depreciation in rupee.
Equity fund managers’ deployment in software stocks stood at Rs 31,834 crore in September last year.
Industry experts said that fund managers have been raising their allocation to software stocks since June due to declining rupee against the US dollar.
Like exporters, IT companies earn majority of their revenue in dollars. Depreciating rupee means exporters get more rupee per US dollar.
Indian rupee has fallen by Rs 1.31 since June. The domestic unit is trading at 64.95 against the dollar.
As per the data available with the Securities and Exchange Board of India (SEBI), overall deployment of equity funds in software stocks stood at Rs 43,053 crore in September compared with a previous high of Rs 40,602 crore in August.
Further, equity fund managers’ deployment in software stocks was at Rs 38,404 crore and 35,409 crore in July and June, respectively. It had stood at Rs 35,750 crore in May.
Besides, exposure to software stocks was at 10.65 per cent during the period under review against 10.27 per cent in the preceding month.
Furthermore, IT was the second-most preferred sector with fund mangers after banks.
However, fund managers have reduced their exposure in traditional investment sectors like banking stocks. Deployment of equity funds in banking stocks was at Rs 84,360 crore during the period under review.
Among others, MFs have an exposure of Rs 33,753 crore in pharmaceuticals, followed by auto (Rs 28,516 crore) and finance (Rs 23,622 crore).
The BSE IT index grew 3.73 per cent per cent last month, while the BSE Sensex slipped by 0.5 per cent.
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.