Despite the sharp correction in the equity markets during last one year, the market value of Life Insurance Corporation’s (LIC) investments in listed companies has managed to register a marginal growth.
Data compiled by Prime Database showed that the market value of LIC’s investments across NSE-listed companies by the end of December 2015 was R4.15 lakh crore – close to R1,000-crore increase from its portfolio value during the quarter ended March 2015, when the benchmark indices had peaked. The Nifty lost more than 12% during the period.
This growth in LIC’s portfolio amid weak markets is due to renewed buying by the insurer in information technology(IT) and fast moving consumer g goods (FMCG) segments which have outperformed the benchmark indices during the previous calendar, a senior official of LIC told FE on condition of anonymity.
For instance, LIC’s shareholding in Infosys has increased to 5.6% in Q3FY16 against 4.81% during the quarter ended March 2015. Similarly, LIC has increased its stake in India’s largest IT firm, TCS, by little more than 50 basis points in the previous three quarters.
In the FMGC space, the state-owned insurer increased ownership in Nestle and Colgate Palmolive by 60 basis points, Capitaline data showed.
“Much of the year, capital markets have been down. This has given LIC an opportunity to be net buyer. We have been focusing on buying available stocks and we have been fairly active in IT, pharma and FMCG space in the last few months,” said SK Roy, chairman of LIC, in a media interaction a few days ago.
Taking advantage of the sharp fall in banking and financial services stocks, LIC has also increased its ownership across various public sector banks (PSBs) since the beginning of the current financial year. LIC’s stake has gone up in eight PSBs, including Bank of Baroda and Canara Bank. The insurer has also increased ownership in private banks such as ICICI bank and Axis Bank, Capitaline data showed.
A senior LIC official on condition of anonymity told FE that the insurance major would continue to buy banking shares as compelling valuations of the banks offer good investment opportunity. “LIC invests from long-term perspective. The banking stocks might have performed poorly in the last few months, but in the longer horizon of five to seven years, these shares have yielded good returns,” the official said.
LIC’s investments in equity markets have witnessed a steep rise during FY15-16 even as equity markets have corrected more than 20% since the peak.
LIC has invested R53,000 crore in the equity markets so far in the current financial year. It is 36% higher than the amount invested during the previous fiscal, Roy said.