Mutual funds pile into banks

Domestic mutual funds poured about ₹38,000 crore into five big bank stocks in March, absorbing part of a ₹60,655 crore foreign selloff in financial shares. (economictimes.indiatimes.com) The heaviest mutual fund buying was concentrated in HDFC Bank, ICICI Bank, State Bank of India, Kotak Mahindra Bank and Axis Bank, with HDFC Bank the top pick across leading fund houses, according to Prime Database estimates cited by The Economic Times. (economictimes.indiatimes.com) Foreign portfolio investors sold ₹1,17,775 crore of Indian equities in March, and financial services alone accounted for ₹60,655 crore of that exodus, according to National Securities Depository data reported by Mint. (livemint.com) That selling hit bank valuations hard. The Nifty Bank index fell more than 17% in March, and HDFC Bank shares dropped 17.6% during the month, Mint reported. (livemint.com) Mutual funds used the decline to put idle money to work. Nuvama Alternative and Quantitative Research told CNBC-TV18 that fund cash and cash equivalents fell to ₹2.11 lakh crore in March from ₹2.40 lakh crore in February, implying deployment of about ₹29,300 crore. (cnbctv18.com) Some of the biggest individual purchases came from the largest fund houses. CNBC-TV18 reported SBI Mutual Fund added HDFC Bank worth ₹2,614 crore and ICICI Bank worth ₹2,400 crore, while ICICI Prudential Mutual Fund bought HDFC Bank worth ₹4,574 crore. (cnbctv18.com) The buying wave landed in a month when retail money into mutual funds was still rising. The Association of Mutual Funds in India said equity funds logged ₹40,450 crore of net inflows in March, the 61st straight month of positive equity inflows, while systematic investment plan assets stood at ₹15.11 lakh crore. (amfiindia.com) The broader industry still looked weaker on the surface because markets fell sharply. The Association of Mutual Funds in India said total assets under management stood at ₹73.73 lakh crore in March, and linked the month-on-month decline to mark-to-market losses as the Nifty 50 and Sensex fell 11.3% and 11.5%. (amfiindia.com) Mint reported the foreign selling was driven by the United States-Israel-Iran conflict, a weaker rupee and higher crude oil prices, while Geojit’s V K Vijayakumar said the outflows were hitting fundamentally strong banks with healthy credit growth and asset quality. (livemint.com) March left Indian bank stocks caught between two powerful flows: overseas investors cutting risk fast, and domestic mutual funds using fresh inflows and cash reserves to buy the dip. (livemint.com)