LIC stares at falling value after gorging on public sector stock
Last month, the government allowed LIC to buy up to 30% of the equity of a company whereas the insurance regulator allows insurance firms to hold only up to 10%. The move will allow LIC to buy larger stakes in PSUs at a time when the government is looking to raise R30,000 crore through disinvestments. It’s not just Hindustan Copper or ONGC (of which LIC bought 40 crore shares at R304 earlier this year and which now trades at R262.55) on which the state-owned insurer is losing money. Several other public sector investments too have lost value.
For instance, although LIC has been adding to its purchases of IOC, BHEL and SAIL, the total value of its stakes in these firms, dropped 18% year-on-year to R7,558.50 crore at the end of September 2012. In this time, the Sensex gained 14.03% to 18,762.74 points. As on September 28, India’s largest life insurer had raised its stake to 2.86%,
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