As per the data available at the Securities and Exchange Board of India (SEBI), the holding of banking stocks in mutual funds reduced by more Rs 21,600 crore for the month of September, driven by the correction in equity markets.

The data showed that the overall deployment of equity funds in bank stocks was at Rs 1,88,620 crore at September-end when compared to Rs 2,10,251 crore in the preceding month. A PTI report said that this was the lowest level of deployment since June when equity funds' exposure to bank stocks stood at Rs 1.87 lakh crore. In May this year, it was at Rs 1.89 lakh crore.

The exposure to banking stocks in percentage terms was at 19.78 percent of equity AUM last month as against 20.21 percent in August.

During the same period, the BSE Bankex index slumped by 12 percent, while the exchange's benchmark Sensex fell a little over 6 percent. Despite the decline in exposure, banking stocks still remain among the most preferred sectors among fund managers, due to the high weightage attached to the index.

The second-most popular sector among fund mangers is finance. The deployment in finance software stocks by equity fund managers was at Rs 87,519 crore, followed by software (Rs 88,453 crore), consumer non-durables (Rs 71,072 crore) and auto (Rs 46,920 crore).

Mutual funds are investment vehicles made up of a pool of funds collected from a large number of investors. They invest in stocks, bonds, money market instruments and similar assets.