Mutual fund managers raised their exposure in bank stocks to an all-time high of nearly Rs 63,000 crore in October this year amid a rally in the stock market.

The move comes after fund managers dropped their investment levels in bank stocks in September, after raising it for seven consecutive months.

According to the latest data available with Securities and Exchange Board of India, MF investments in bank stocks as on October 31 surged to Rs 62,718 crore, accounting for 19.91 per cent of the total equity assets under management (AUMs) of Rs 3.15 lakh crore.

The previous high was in August this year when investment in the sector climbed to Rs 56,625 crore.

In comparison, the MF industry’s exposure to banking sector stood at Rs 55,398 crore in September this year.

MFs had been raising their exposure to banking shares since January.

Software was the second most preferred sector with MFs last month with an exposure of Rs 32,838 crore, followed by pharma (Rs 21,845 crore), auto (Rs 20,282 crore) and finance (Rs 17,843 crore).

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

According to market participants, MFs have been showing interest in banking stocks since the beginning of the year amid rising equity market.

They believe that the ongoing market rally might see mutual fund assets getting diversified.

Meanwhile, the banking index (bankex) shot up by nearly 11 per cent in October this year, while the 30-scrip BSE Sensex rose 4.64 per cent.

This year has seen a consistent growth in investment in banking stocks by equity fund managers with fund infusion growing from Rs 30,339 crore in January to Rs 62,718 crore in October.

In percentage term, exposure has risen from 16.6 per cent to 19.91 per cent during the period.

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