life insurance corporation: LIC’s equity investments are on track for a bumper year

Mumbai: Life Insurance Corporation’s equity investments may be on track for a bumper year in FY21 thanks to the sharp stock market rally in the past six months. So far this financial year, the state owned insurer, which is the largest domestic institutional investor in Indian stocks, has booked close to Rs 15,000 crore as profits from equities, a senior executive of LIC told ET. This is about 80% of the gains it made from the market last financial year. In FY20, LIC made Rs 18,500 crore profits from equities, he said.

LIC has invested about Rs 50,000 crore in the last six months in Indian equities, the official said.

“LIC is a contrarian investor. We found opportunities in March when markets fell and then when stocks went up, we booked profits,” the person quoted above said.

After falling 37% between February 19 and March 23 this year, BSE benchmark Sensex recovered 53% from March 24 till date. Firm global cues, inflows from foreign institutional investors fuelled the stock rally. Financial markets calmed after a turbulent period in February-March sparked by the coronavirus pandemic and volatility has ebbed thanks to the large doses of fiscal and monetary policy stimuluses in developed economies.

The senior LIC official said in the last six months (April – September) it has already invested Rs 2.6 lakh crore across equities, government securities, corporate bonds and state development loans. In the remaining part of this fiscal, it plans invest at least Rs 2 lakh crore. Last fiscal year, it had invested over Rs 4 lakh crore across equity, corporate bond and G-Sec.

The market value of LIC’s holding in Indian companies swelled to Rs 5.34 lakh crore as of June 30 from Rs 4.15 lakh crore on March 31. The data for September quarter were not fully available as companies are yet to make the disclosures.

On an overall basis during the quarter, LIC’s holding went up in 51 listed companies, while it’s holding reduced in 30 companies. Its holding in around 224 companies remained unchanged.

Data compiled by ETIG Database show that in the June quarter, LIC increased its stake more than 1% in Dredging Corp. of India, Havells India, Bata and Tata Steel. Companies in which LIC reduced its stake more than 1% include GAIL, Power Grid, Tata Consumer, Dr. Reddy’s Lab & Britannia Industries.

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