Even as the Sensex has scaled up beyond 20,000, insurers are treading cautiously in their investment strategies.

An official at the Life Insurance Corporation (LIC), the largest capital market player, said the institution is carefully watching the FII inflows, which touched $22 billion so far during calender year of 2010.

?We are booking profit in certain segments while at the same time careful in our further exposure to certain other segments. We don?t expect any major correction in the market before December when FIIs will book profits, ?? said the official adding that though Indian stocks have become expensive, some of the NIFTY stocks are still attractive.

The corporation plans to invest Rs 2 lakh crore during the current fiscal across the asset class.

?We don?t think government will take any measures to discourage FII inflows as there are major public offerings from state-owned companies lined up during the year. We will examine their pricing before taking any decision whether to invest or not,?? said the official.

The government proposes to raise Rs 40,000 crore from sale of equity in the public sector undertakings in the current fiscal. Public offers of three blue chip companies SAIL, Indian Oil and ONGC will hit the capital market in the last quarter of the current fiscal,

Vikram Kotak, chief investment officer, Birla Sunlife Insurance said that after touching the height of 21,000, the market would start correcting itself by 10-12%.

?As an insurer, we have always been a selective buyer. The pace may be slow, still we will continue to buy in the current scenario. At a time when cash flow by way of increasing premium income is happening , we can?t keep the cash idle,?? he said.

Nirakara Pradhan, CIO, Future Generalli Insurance said that globally the concerns like huge fiscal deficits and rising unemployment continue. Still, Indian market was doing well thanks to good monsoon.

So far, total return from Indian equity market is only 14% and in August it was merely 5%. The Indian market might be looking overheated when compared to the global markets, but actually may not so seen in a historical context.

?I see the equity market to touch the mark of 22,000 by year -end. Correction is the part of the process. At the moment, we have been buyers and playing the role of an investors. Only 10-20% of the investors have been booking profit,?? he said.

Shashi Krishnan, chief investment officer (CIO), Bajaj Allianz Life Insurance explained that the stock market was currently driven by flows from the overseas investors.

Secondly, rupee has not depreciated, which also goes in favour of investors. ?We as insurers are reasonable buyers in this market. Primarily, we are not buying on valuation. Still, from a long perspective, we do believe in equity market, which is fairly valued at this point of time. I do see a correction by 7-10% after the market touches the mark of 22,000,?? he said.

Abhijit Gulanikar, CIO, SBI Life Insurance said that market was likely to remain at this level for some time now. “Though we have reached very close to the level what we had achieved 32 months back, the scenario is different this time. The PE ratio of the stocks have increased and hence it is not comparable. In my company?s case we have got our long-term allocation in equity. I think the inflation will come down to the level below 6% by March next year.?? he observed.

G Srinivasan, CMD, United Insurance said the company had booked profit in the current bull market which has boosted its profit during the half year of the year.