LIC cuts exposure in equities

The largest insurer has sold shares worth Rs 12,600 crore

State-run Life Insurance Corp of India (LIC), a major domestic institutional investor, sold shares worth Rs 12,600 crore (about USD 2.32 billion) in companies related to financial, auto and pharma sectors in the October-December quarter of the current fiscal.

At the same time, LIC acquired shares worth about Rs 3,877 crore (about USD 714 million) in energy, metal and mining and software companies, the global research report by BofA-Merrill Lynch said.

LIC sold shares of private lenders --Axis Bank, HDFC Bank and ICICI Bank--drug major Sun Pharma and auto firm Mahindra & Mahindra, while bought shares of energy companies-- Reliance Power, Cairn India and Reliance Industries-- IT giant Infosys, and FMCG firm ITC, the report said.

"State-run LIC lowered its exposure to companies like Axis Bank (with sale of shares for an estimated USD 891 million), Mahindra & Mahindra  (USD 177 million), HDFC Bank (USD 157 million), Sun Pharma (USD 154 million) and ICICI Bank (USD 145 million)," the report said.

On the other hand, LIC's major investment during the quarter included Reliance Power (USD 203  million), Infosys (USD 162 million), Cairn India (USD 150 million), Reliance Industries (USD 142 million) and ITC (USD 94 million).

The report said that LIC has emerged as net sellers during October-December quarter and most of the pullout was from private sector companies.

Also, LIC was net seller during the July-September quarter 2012 with the insurer purchasing shares worth an estimated USD 1.3 billion ( Rs 7,020 crore) in India equities and selling shares to the tune of USD 436 million (Rs 2,355 crore).

In terms of sectors, LIC sold shares valued at USD 1.45 billion in the finance portfolio during the three months ended December 31, 2012 followed by auto (USD 368 million), pharma (USD 325 million), industrial (USD 82 million), cement (USD 81 million) and chemicals (USD 7 million), the report said.

In contrast, the insurance giant's investment in the utilities sector stood at USD 300 million, followed by USD 197 million in the energy category, USD 142 million in metals and mining space, USD 54 million in software and USD 21 million in the telecom area.

Financial sector accounted for 24 per cent of LICs total equity portfolio in the country followed by energy at 16 per cent, consumer goods 13 per cent and software 8 per cent.

According to an estimate, LIC has lowered its holdings in as many as 27 of the 50 blue-chip firms forming the market benchmark index Nifty, selling shares worth an estimated Rs 8,000 crore for the three-month period ended December 31, 2012.