LIC bets heavily on PSU stocks

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Published: April 17, 2015 12:16:00 AM

In a quarter when equity markets rallied less than 2%, the buying interest of Life Insurance Corporation of India...

In a quarter when equity markets rallied less than 2%, the buying interest of Life Insurance Corporation of India (LIC), the biggest domestic institutional investor, was inclined towards PSUs.

According to exchange filings of the last fortnight, some of the biggest purchases of LIC during the three months to March 2015 came from the PSU universe even as the thematic index on the space, lost more than 7% during the period. The Sensex rallied 1.7% in the January-March quarter, its slowest gain in six quarters. As per Bloomberg, DIIs have sold a net of R5,038 crore or $810 million worh of Indian equities during the quarter.


The insurance giant raised its stake in Coal India by 4.65% to 7.42% by participating in the offer for sale through which the government reduced its stake in the coal producer by 10%. LIC is believed to have coughed out R10,200 crore to more than double its stake in Coal India.

Other big purchases in the quarter include, UCO Bank and Bank of India in which LIC upped stake by 7.52% and 2.4% respectively. These stocks have lost 24% and 35% of their value in the quarter. Some other PSU banks that crashed 18-35% in the quarter and where LIC increased its ownershipinclude Union Bank (stake raised by 1.26%), Canara Bank (0.89%) and Andhra Bank (0.53%).

LIC also upped its stake in NMDC, NHPC, SAIL, ONGC and NALCO where it purchased 0.22% to 0.5% of equity from the open market.

Data also shows that LIC exited some of its exposure in the private sector companies as it sold shares in Asian Paints, Federal Bank, Ashok Leyland, Bharat Forge, IDFC, Tata Chemicals, HDFC Bank and Glenmark Pharma. As per latest exchange submission the state owned insurance major has brought down its stake in Tata Communication by 2% to 5.26% by selling shares between November 2014 and early April this year.

Towards the end of the quarter, LIC picked up about 10% stake in Credit Analysis and Research (CARE) for a total of R418 crore by open market transaction. Hero Motocorp was the only other private sector player in which LIC picked up a substantial stake (1.45%) during three months to March 2015, even as its ownership in ACC, JSW Steel, Biocon, Infosys and Tata Power also witnessed marginal hike in the period.

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