Nifty PSU Bank climbs 17% YTD as funds cut mid, small-cap bank holdings

In the current market, driven by a surge in retail investor enthusiasm, the Nifty PSU Bank index has seen a significant rise of 17% year-to-date. This increase comes even as mutual funds have reduced their holdings in various banks within the mid-cap and small-cap segments. During October, notable reductions were observed in mutual funds’ stakes in UCO Bank, Indian Overseas Bank, and the Bank of Maharashtra. Specifically, holdings in UCO Bank decreased from 1.04 crore to 0.99 crore shares, Indian Overseas Bank from 1.37 crore to 1.24 crore shares, and the Bank of Maharashtra from 3.22 crore to 2.93 crore (1 crore = 10 million) shares.

Bandhan Bank and Central Bank of India also experienced significant sell-offs by mutual funds. In addition to these mid-cap banks, Ujjivan Small Finance Bank was among the small-cap banking stocks affected by sales, along with other industry players such as Alembic Limited and ITD Cementation.

Geojit Financial Services has expressed caution regarding this trend. They warned investors about making speculative moves on small-cap stocks that lack fundamental backing amid the heightened market activity today. The brokerage’s advice suggests a more measured approach to investing in this sector, particularly given the volatile nature of smaller cap stocks compared to their larger counterparts.

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