LIC's equity portfolio value may be at an all-time high of $86 billion

The insurance behemoth's portfolio value has soared by $31 billion since March 2020

The value of equity holdings of Life Insurance Corporation (LIC) has climbed to record levels. At the end of the September quarter, the insurance behemoth’s holding in companies from the top 200 universe stood at $77 billion. Since then, the market has climbed another 12 per cent. Assuming that the value of LIC’s holding has risen in line with the markets, its portfolio size today could be around $86 billion, higher than the previous record of $84 billion in March 2018.

In March 2020, when the markets were at a low, the value of LIC equity holdings had plunged to $55 billion — the lowest in six years — data provided by Kotak Institutional Equities showed. This was the value of LIC’s stake in companies from the BSE200 index, where it held at least one per cent. The BSE 200 universe accounts for 84 per cent of India’s total market capitalisation.

During the first half of 2020-21, the value of LIC’s holding surged by 40 per cent, or $22 billion (Rs 1.63 trillion) to $77 billion (Rs 5.7 trillion). This was on account of both appreciation in the price of underlying securities and incremental investments by the state-owned firm. The BSE200 index gained just 9 per cent during the three months ended September 2020.

A senior LIC official told Business Standard that the insurer had pumped Rs 55,000 crore in the equity market since April. During the same period of last year, LIC had invested Rs 32,800 crore.

However, it is difficult to ascertain how much net investment LIC made. The figures quoted are on a gross basis. The insurance also books profits at regular intervals. An estimate of LIC’s investment this year can be made from the institutional trading data disclosed by the stock exchanges. The so-called domestic institutional investors (DIIs) have sold shares worth Rs 63,500 crore from the stock markets since April. However, over Rs 61,000 crore of this pullout has been from mutual funds. In the first half of 2020-21, DIIs, excluding MFs, invested about Rs 16,400 crore in domestic equities — the bulk of this was from LIC.

LIC is known to be a contra player. It buys when the market goes through a weak phase and while it is known to book profits when markets do well. The benchmark indices plunged over 40 per cent from their peak this year, providing an ideal hunting ground for LIC. However, the rebound in the market has been equally sharp, too, thanks to sustained flows from overseas investors.

Market observers say LIC must be sitting on attractive gains on its investments made since March. However, it remains to be seen if the insurance giant — a long-term investor — would flip its holdings in a matter of a few months.