LIC shareholding in listed companies drops to record low

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Even as benchmark indices rose 13% to new highs in the quarter ended September, the country’s largest institutional investor, Life Insurance Corporation of India (LIC), steadily reduced its exposure to shares, shows the latest data.

LIC’s holdings in 281 NSE-listed businesses where it owns more than 1% of the shares fell to 3.69% of the aggregate market value of these companies as of the quarter ended September 30. That’s down from 3.91% at the end of September last year and the all-time high of 5% as of June 30, 2012, Mint reported quoting the data from primeinfobase.com.

Since June last year, when its stock ownership was at 3.98 percent, LIC has gradually reduced its stake in equities, according to the data. Domestic institutional investors’ (DIIs) overall shareholding fell to a three-year low in the second quarter of FY22, as per the most recent market data.

The report quoted an analyst as saying that investors tend to take money off the table as markets rise. LIC has booked profit as well, taking advantage of the strengthening markets.

Equity holdings of insurance companies fall

According to the data, LIC reduced its stake in 105 firms, whose average stock prices rose 2.39%, while increasing its stake in 94 companies, whose average stock prices soared 10%. As a result, LIC’s equity investment reached an all-time high of Rs 9.39 trillion as of September 30, up 11.4% from the previous months.

Equity holdings of insurance companies fell to a six-year low of 4.81% as of September 30, compared to 5.16% the year before. Domestic institutional investors’ shareholdings, which include domestic mutual funds, insurance companies, banks, financial institutions and pension funds, fell to a three-year low of 13.12% in September, compared to 13.94% during the same period a year ago. This was witnessed despite the fact that domestic institutional investor inflows increased to Rs 32,019 crore in the quarter.

However, among the domestic institutional investors, domestic mutual funds raised their holdings in NSE companies to 7.36% in September, following a consecutive decline for five quarters.

FPI investors reduce stake in NSE listed companies

According to the data, the holdings of foreign portfolio investors (FPIs) in NSE listed companies fell marginally to 21.47% as of September 30, compared to 21.52% in the year earlier.

Foreign portfolio investors’ holdings by name are only available for companies with a market capitalization of more than 1%, yet such companies account for just 15.9% of all FPI holdings.

The report quoted another analysis by Motilal Oswal Financial Services that showed consumer durables, telecommunications, insurance, metals, state-run banks, capital goods, oil and gas, and real estate were among the sectors where foreign portfolio investors boosted their holdings.