LIC ups Infy stake to 6.3%

Buys Rs 2,000 cr worth shares in June quarter, holding up by 1.4%

Life Insurance Corporation of India (LIC), the country’s largest insurer, has raised its stake in Infosys to 6.3 per cent, with purchase of shares worth an estimated Rs 2,000 crore in the first quarter of the current financial year.

LIC, also one of the biggest investors in the Indian stock market, saw its holding in the information technology (IT) major rise from 4.9 per cent earlier. LIC is the largest non-promoter shareholder of the company.

The insurer raised its stake even as a number of foreign investors pared their holding in the company, known as the bellwether stock in the Indian IT space till recently, but now facing growing concerns about growth prospects.

Infosys shares fell sharply yesterday after the company announced a disappointing first-quarter result and the weakness was continuing in the stock this morning.

The stock was down 0.7 per cent at Rs 2,250 at the BSE in mid-day trade, as against a 52-week high of Rs 2,990 on February 22. The overall FII holding in Infosys fell from 39 per cent to nearly 38 per cent during the last quarter, though major investors like Aberdeen, Oppenheimer, Franklin Templeton, Vanguard and Singapore government's investment arm raised their stake marginally.

Among the major foreign investors (those holding at least one per cent), only Abu Dhabi Investment Authority pared its stake, that too marginally from 2.12 per cent to 2.08 per cent. However, all the FIIs together are estimated to have sold shares worth Rs 1,500 crore during the quarter. Concerns are being raised about Infosys’ growth prospects for two quarters now, but state-run LIC appears to be keeping its faith in the company, market observers said.

Barring the last quarter of the previous financial year ended March 31, LIC has been mostly raising its stake in Infosys for many quarters now. LIC had made its first investment in Infosys in 2002, when its holding was nearly two per cent. Since then, its stake has been continuously rising and had crossed five per cent mark last year and then rose past six per cent level during the last quarter.

The erstwhile Unit Trust of India (UTI), one of the biggest stock market investors of the country before being wound up, used to be the largest non-promoter shareholder in Infosys. UTI held a stake of more than eight per cent in 2001, but it gradually fell to about one per cent by 2003.