Private banks continue to remain the biggest overweight (OW) for equity mutual funds (MFs), although the OW stance has come off its peak. At present, 25 per cent of MF investments in Nifty stocks are in private banks. Telecom, utilities, and healthcare are other top weights for MFs. On the other hand, oil & gas has been the biggest underweight (UW). The sector has 16.7 per cent in the Nifty. However, its MF allocation is just 12.2 per cent.
Experts say the UW stance is on account of Reliance Industries (RIL). “RIL’s weight in the index is nearly 15 per cent. However, the stock remains under-owned, partly due to technical factors,” said a fund manager. Fast moving consumer goods (FMCG) is another space fund managers are underweight on. Experts say the stance stems from valuation and growth concerns. MFs have pruned their holdings in the non-banking financial companies (NBFC) too, going 240 basis points (bps) underweight.