Hike in LIC investment ceiling to 30% good for insurer, market: Experts
Observers see LIC as maintaining the balance in a situation where foreign institutional investors (FIIs) pull out. “The move will provide greater flexibility to the fund managers of LIC by allowing them to invest more in stock that they are comfortable with and will also allow LIC to act as a counter balancing body when FIIs pull out,” said Aseem Dhru, CEO, HDFC Securities.
Others believe that given the huge resources generated through premium collections, the insurer could now invest more in large cap stocks and those of higher quality. “The move will help LIC to deploy its resources more rationally and meaningfully,” said Manish Sonthalia, vice president and fund manager at Motilal Oswal AMC. “With the amount of resources it has, it can invest only in stocks of certain size and this move will allow it to invest more in large cap, less risky and high quality stocks rather than just diversify for lack of options.”
However, experts have their concerns on high concentration and government milking it for its disinvestment programme. “The fundamentals of risk management say that it is not a good idea to have high concentration in one
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