LIC increases stake in banks in June-Sep quarter

Pares exposure to IT, pharma sectors

LIC, the country’s largest insurer, has increased its shareholding in banks while paring its exposure to the IT and pharma sector.

Of the total 31% stake increase that it has gone for in companies across sectors, more than a third of it has been in the banking sector in names like ICICI Bank, YES Bank and State Bank of India among others. On the other hand, of the 24% stake that it has pared, about a third of it has been in IT and pharma sector heavyweights like Infosys, Tech Mahindra, HCL Technologies and Lupin among others.

Analysts said that this was typical of the insurer to look at stocks whose valuations are beaten down.

“LIC is a long-term investor and looks at valuations from that perspective. The insurer generally takes a contrarian view wherein when FIIs are seen selling in a particular sector, it is seen increasing its exposure to that sector. This is because valuations in such stocks become attractive because of the selling pressure,” said Sonam H Udasi, head of research at IDBI Capital.

Market men said that LIC had been increasing stake in the IT and pharma in the last one-year. As valuations in these sectors have moved up, the insurer was now booking profits.

LIC has increased its shareholding in ICICI Bank and YES Bank by 3%, the highest by the insurer. The third largest rise in bank share-holding has been in State Bank of India where it has increased stake by 2.5%.

Among IT firms, the maximum decline in shareholding has been in case of Tech Mahindra where it has pared its stake by more than 4%, followed by Infosys at 1.7% and HCL Technologies at 1.1%.