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Life Insurance Corp. of India (LIC), the country’s top institutional investor in the equities market, pared its stockholdings to a record low in the December quarter as it sought to capitalize on a surge in stock prices. LIC trimmed its exposure in 290 listed firms to an all-time low of 3.7 per cent of the total market value as on 31 December, according to data compiled by Prime Database. This is a drop from the state-run insurer’s shareholding of 3.91 per cent just three months earlier and 3.96 per cent at the end of 2019. LIC’s shareholding in these companies was at a record high at 5 per cent in June 2012. LIC shareholding data includes companies where its stake is more than 1 per cent.
LIC’s move to cut stakes came as benchmark indices gained 24 per cent in the December quarter. Domestic institutional investors, including insurance firms, mutual funds, banks and financial institutions, have turned net sellers, withdrawing Rs 1.02 trillion from shares during the quarter.
On an overall basis, LIC’s holding grew in 79 firms listed on the NSE in the December quarter. The average stock prices of these companies gained 20.82% in the same period. LIC reduced its holding in 68 companies on the NSE. The average stock prices of these firms rose 26.62 per cent in the same period.
The companies that saw the highest reduction in LIC’s stake in percentage terms are New India Assurance, Bajaj Auto, Birla Corp., Apollo Hospitals Enterprise, Bharat Forge, Dr Reddy’s Laboratories, MSTC Ltd, Mphasis, DCW and Dabur India. In six of those 10 firms, LIC sold off its entire stake.
Companies in which LIC’s holding rose the most in the December quarter are Bank of Baroda, Punjab National Bank, Sanofi India, BEML, Capri Global Capital, Canara Bank, Sterlite Technologies, GMR Infrastructure, Strides Pharma and IndusInd Bank. On an aggregate level, domestic insurance firms’ holding in 698 listed companies fell to 5 per cent in December from 5.17 per cent in September.
Meanwhile, retail investor holding in firms listed on the NSE fell to 6.9 per cent in the December quarter from 7.01 per cent in the September quarter, as these investors took advantage of the market rally to book profits. However, retail holding increased in 634 companies listed on the NSE last quarter when the average stock prices of these companies rose 23.77 per cent. Retail investor holding fell in 929 companies where average stock price jumped 34.61 per cent. “This further validates the oft-used phrase that retail buys at the peak and sells at lows,” Haldea said.
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