LIC reduced holdings in second quarter as market hit record

MUMBAI : Life Insurance Corp. of India (LIC), the country’s largest institutional investor, steadily reduced its exposure to equities during the quarter ended September 30 even as benchmarks gained 13% over the period, reaching record levels.

LIC’s stake in 281 NSE-listed companies, in which it owns more than 1% of the shares, has fallen to 3.69% of the aggregate market value of those companies as of September 30, according to data from primeinfobase.com. This is lower than the 3.91% it held at the end of September last year and the record 5% as of June 30, 2012.

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Data showed that LIC has gradually reduced its stake in the shares since June of last year, when its shareholding was 3.98%. According to the latest market data, the aggregate shareholding of domestic institutional investors (IDIs) fell to its lowest level in three years in the second quarter of FY22.

“After the pandemic, Indian markets have grown steadily, making huge profits compared to other asset classes. When the markets go up, investors tend to take money off the table. LIC also posted profits to take advantage of strong markets, ”an analyst said on condition of anonymity.

The analysis showed that LIC reduced its stake in 105 companies, whose average share price increased by 2.39%, while it increased its stake in 94 companies, whose average share price increased by 10%. As a result, LIC’s investment in equities reached a record high of ??9.39 trillion as of September 30, an increase of 11.4% over previous months.

Equity holdings of insurance companies fell to a six-year low of 4.81% as of September 30, from 5.16% a year earlier. Overall, the shareholding of domestic institutional investors, which includes domestic mutual funds, insurance companies, banks, financial institutions and pension funds, has fallen to its lowest level in three years at 13.12% in September against 13.94% a year ago. This despite the influx of domestic institutional investors reaching ??32,019 crore during the quarter.

However, among domestic institutional investors, holdings of domestic mutual funds in NSE companies rose to 7.36% in September, after five consecutive quarters of decline.

“Their share has grown thanks to the net inflows into national mutual funds of an enormous amount. ??38,221 crore during the quarter, ”said Pranav Haldea, Managing Director of Prime Database Group.

The participation of foreign portfolio investors (REITs) in companies listed on NSE fell to 21.47% as of September 30, from 21.52% the previous year.

Disclosure of foreign portfolio investors’ holdings by name is only available for company holdings greater than 1%, but these cases represent only 15.9% of total REIT holdings.

“REITs are the largest non-promoter shareholders in the Indian market, and their investment decisions have a significant impact on stock prices and the overall direction of the market. So it is time for full details of all their holdings to be made mandatory for disclosure in India, ”said Haldea.

Another analysis by Motilal Oswal Financial Services showed that foreign portfolio investors increased their participation in durable consumer goods, telecommunications, insurance, metals, state banks, capital goods, petroleum. and gas and real estate.

On the other hand, domestic institutional investors increased their stake in PSU banks, healthcare, private banks, insurance companies, automobiles, retail, consumer and non-bank financial companies in the second quarter of the year. EX22.

Meanwhile, the ownership of retail investors (people with up to ??2 lakh of shareholding) in companies listed on NSE fell slightly to 7.13% in September from 7.01% the previous year.

However, in terms of value, retail holdings in companies listed on NSE reached a record high of ??18.16 trillion, according to Prime Database.

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