Lic Investments To Belie Market Hopes

Life Insurance Corporations investible funds for 1997-98 amount to Rs 15,000-20,000 crore. However, only about 10 per cent of this money will eventually flow into the stockmarket, according to senior LIC sources.

This disclosure is expected to disappoint stockmarket players, who have been excited over rumours that LIC had almost Rs 10,000 crore available for investment in the stockmarket. How-ever, LIC officials said only Rs 1,500-2,000 crore may actually flow into the share market.

The demand for money has picked up and no institution has investible surpluses of Rs 10,000 crore. We have investible funds of about Rs 15,000-20,000 crore for 1997-98. However, not all goes to the equity market. Depending on our analysis of the situation, we decide whether to invest 6 or 10 per cent (of the investible funds) in the equity markets, said a senior LIC official.

 

The source added that LIC is not a short-term player in the market and follows a conservative investment approach. We are not here to invest today and pull out tomorrow. The market is very attractive at current valuations and we will continue to make investments that we feel will give good returns. Depending on the trend in the market we will decide whether to invest six per cent or 10 per cent of our funds in the market.

Leading brokers who are members of the LIC investment panel confirmed that LIC continues to be a cautious buyer. Before the RBI announced its policy measures on January 16, there was talk in the market that UTI and LIC had investible funds of Rs 10,000 crore. The downslide in the market in case of a sudden pull-out by FIIs could have been countered by this money, a leading institutional broker said.