Software Stocks New Pet of MFs - The New Indian Express

Software Stocks New Pet of MFs

Published: 27th March 2014 01:29 AM

Last Updated: 27th March 2014 01:30 AM

Mutual funds are betting big on software companies, and have upped their exposure in the sector to a new high of Rs 28,784 crore in February.

According to latest data from Securities and Exchange Board of India, at the end of  February, mutual fund investments in software stocks accounted for 15.2% of their total equity assets under management of Rs 1.89 lakh crore.

While in January, investment of mutual funds in software companies was at a record level of Rs 27,772 crore.

Market players said the preference for software scrips was primarily because of the weakness in the rupee (which is now showing signs of recovery), revival of demand in key markets like the US and good performance by IT companies in the past few quarters especially Infosys. A relatively weaker rupee boosts the value of dollars earned by IT firms.

Mutual fund investment in software stocks has gained traction since May, when the rupee came under pressure. The currency has depreciated by over 12% against the dollar since April 30.

MFs had an exposure of 17.08 per cent to bank stocks in February, the highest among all sectors. Their investment in banking shares was Rs 32,225 crore.

A mutual fund is a vehicle made up of a pool of funds collected from investors that buys and sells securities such as stocks, bonds etc.

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