Mutual funds' allocation for bank stocks hit a record high of Rs 1.16 lakh crore in end-January, primarily on account of cheaper valuations.
In comparison, fund managers had allocated Rs 78,644 crore for bank shares in the year-ago period.
"We could be getting close to the bottom of the NPAs (non-performing assets) cycle, valuations were not that expensive, hence funds could have preferred buying into the sector," Quantum Mutual Fund Associate Fund Manager Equity Nilesh Shetty said.
In percentage terms, exposure to banking stocks was at 20.91 per cent of equity assets under management last month as against 20.84 per cent in December-end.
