LIC’s investment brain sees Sensex at 21,000
THE Sensex is heading back towards its lifetime high level. That’s what the man who manages more than $60 billion equity assets for the life insurer behemoth Life Insurance Corporation of India (LIC), believes.
N Mohan Raj, executive director of investments at LIC, told Financial Chronicle that he expects the Bombay Stock Exchange’s (BSE) benchmark to deliver more than 20 per cent return in the financial year 2010-11 as the economic growth picks pace.
Though he declined to give any specific target for the Sensex at the end of FY11, Mohan Raj expects the Sensex to end 2009-10 at 17,500 levels. A 20 per cent increase would take the 30-stock index to 21,000-mark, surpassing its previous closing high of 20,873. 33 on January 8.
“Things are looking up. Thanks to the government policy of putting more money in rural sector and infrastructure as well as pick up in credit demand, the economy will grow in the next fiscal year,” he said. Mohan Raj believes the Indian market is adequately valued at present and expects companies having bias towards rural consumption to do well.
He said there would be less liquidity for the secondary market because of the strong pipeline of public issues in the next financial year.
The Indian government wants to raise Rs 40,000 crore in FY11 by selling stake in profitable state-run enterprises.
LIC will examine all large public issues, be it from public sector or private sector, and make an investment call based on the merit of the offering, the LIC executive director said.
Mohan Raj said the global situation would continue to impact the Indian market and the inflows of funds from abroad will have a notable role in deciding its future direction. “However, the performance of the
domestic economy and scope for domestic consumption will be favourable factors,” he added.
In FY10, LIC will end up investing up to Rs 60,000 crore in Indian shares, about 49 per cent more than Rs 40,300 crore it invested in FY09.
LIC is one of the dominant players in the Indian stock market, with investments in more than 400 companies. As of December 31, 2009, its top five holdings were - Reliance Industries ($ 5 billion), Larsen & Toubro ($4 billion), State Bank of India ($3 billion), ITC ($ 3 billion) and ONGC ($ 3 billion).