LIC cashes out on top bank counters
By :Rajesh Gajra
Jul 14 2010
The single largest institutional investor in equities in the country, the Life Insurance Corporation of India (LIC), preferred to take out profits from its holdings in banks, as compared with other sector holdings, in the quarter ended June 30, an FC analysis reveals. Its purchases, however, were more diverse across sectors.
LIC had invested Rs 61,648 crore in equities in FY 2009-10, about 50 per cent more than it did in FY 2008-09. FC had on June 10 reported that LIC invested Rs 8,363 crore in equities in the first two months of the ongoing financial year, in the story headlined “LIC to invest Rs 200,000 cr in FY11, Rs 75,000 cr in equities”.
The analysis was based on Capitaline data of public shareholding of more than one per cent in companies as disclosed to stock exchanges till July 13. Of the companies that had made the June-end shareholding pattern disclosure, there were 119 companies in which LIC had holdings under its own name or in the name of its ULIP (unit linked insurance plans) schemes such as “LIC of India Money Plus” and “LIC of India Market Plus”.
Of these 119 companies, 31 saw LIC reducing its stakes. This would have been through sales in the market any time in the quarter ended June. A rough estimate of the shares sold at July 13 prices works out to Rs 2,714 crore. Similarly, LIC also raised its stakes in 34 companies at a rough estimated purchase value of Rs 3,158 crore. In the rest of the companies, LIC did not change its stakes.
LIC was bullish on banking and financial sector stocks in FY 2009-10.
But in the last quarter, it sold a part of its holdings in large market cap financial sector companies such as Punjab National Bank, HDFC Bank, State Bank of India, Housing Development Finance Corporation, Union Bank of India and Canara Bank. Interestingly, it was also a seller in public-sector stocks such as BPCL and HPCL, as well as in other high-profile stocks such as Dr Reddy's Laboratories, Zee Entertainment, Mahindra & Mahindra and GlaxoSmithKline Pharma.
On the other hand, the largest equity investor in the country, was a large buyer in a diverse mix of stocks, that in addition to the top five stake hike in value terms (see table) included Bharat Electronics, L&T and Crompton Greaves.
LIC’s investments in equities are less than its investments in debt securities, predominantly government securities. In FY11, LIC expects its investments to be more than Rs 200,000 crore, of which about Rs 67,000 crore to Rs 75,000 crore will be in equities. In FY10, it invested about Rs 1,92,000 crore, of which Rs 61,648 crore went into equities.