Exclusive: LIC sells shares worth over Rs 12,000-cr in March quarter

State-run insurance giant Life Insurance Corporation of India (LIC) has sold equity shares worth over Rs 12,000 crore of blue-chip companies in the January – March 2013 quarter.

According to the latest shareholding pattern filed by the companies, LIC has emerged as a net seller in recently concluded quarter and most of the pullout has been from private sector companies.

The cash rich LIC is estimated to have sold shares worth about Rs 12,671 crore in frontline companies such as Tata Consultancy Services (TCS), Infosys, Tata Motors, Hindustan Unilever, State Bank of India, Cipla, Maruti Suzuki India, Larsen and Toubro in January-March quarter, data suggests.

It has lowered its holdings in as many as 28 of the 50 blue-chip firms forming the market benchmark index Nifty, selling shares worth an estimated Rs 10,340 crore for the three-month period ended March 31, 2013.

The benchmark indices have reacted sharply by falling over 3% despite of strong fund flow from the overseas investors. The National Stock Exchange (NSE) Nifty fallen 223 points or 223 points, while the Bombay Stock Exchange (BSE) Sensex by 591 points or 3.04% between January-March.

Foreign institutional investors had made net investments of $10.31 billion (Rs 55,622 crore) in first three months of current calendar year 2013, the Securities and Exchange Board of India (Sebi) data shows.

Smart Moves

LIC has bought shares amounting of Rs 6,423 crore of six public sector undertakings (PSU) during the quarter. The insurance giant acquired shares worth of Rs 3,333 crore of NTPC, SAIL, National Aluminium and Rashtriya Chemicals and Fertilisers (RCF) in government divestment programme. It purchased shares of Coal India and NHPC via open market transaction.

“PSU stocks hold good value for the long-term investors. However, due to the regular supply of paper, retail demand or the demand from foreign institutional investors (FIIs) is very low. Since LIC has deep pockets, it can use attractive pricing to enter PSU stocks in offer-for-sale (OFS),” notes A K Prabhakar, senior vice president (equity research), Anand Rathi Financial Services.

LIC finds it attractive to enter PSU stocks which are quoting around low P/E and assured growth in next few years. Many PSU operate in sector where entry barriers are very high and if they can improve corporate governance and efficiency then most of these stocks should be 2-3 times from present level, Prabhakar adds.

Along with PSU companies, the state-run insurer acquired shares worth about Rs 10,445 crore, which include Axis Bank, Wipro, IndusInd Bank, Hero MotoCorp, Bharti Airtel, ITC, HDFC and Hindalco Industries, the data shows.

In terms of sectors, LIC sold shares valued at Rs 4,013 crore in the information technology (IT) portfolio followed by banks and financials (Rs 2,519 crore), automobiles (Rs 1,685 crore), pharmaceuticals (Rs 1,445 crore), fast moving consumer goods (Rs 685 crore) and infrastructure (Rs 504 crore).