Life Insurance Corporation’s holding in 281 companies where it owns more than one per cent of the stock fell to an all-time low of 3.69 per cent, according to a report by Prime Database.
In contrast, the value of its holdings stands at an all-time high of Rs 9.39 lakh crore. Clearly, LIC is not being aggressive in its investing, possibly because it believes the markets to be overheated.
LIC’s holdings were at the peak in 2012, right before the multi-year bull-run began. LIC has often been called a contrarian investor due to its buying and selling activities, though sometimes, these activities are influenced by the government.
In terms of investments, LIC is the largest equity investor among insurance companies at 77 per cent. LIC is the largest life-insurer in India, with a 75 per cent market share, giving it access to large premium cash-flows which it then invests in various avenues until it has to pay out claims.
Along with LIC, Foreign Portfolio Investors have been reducing their stake in Indian listed companies as well. Several foreign brokerages have downgraded India for being overvalued, while upgrading China, which has fallen due to regulatory concerns.
According to Prime, the public market holdings of insurance companies as a whole fell to 4.89 per cent as on 30 September 2021, a six-year low.
Overall, the shareholding of domestic institutions, including insurance companies, mutual funds, banks, financial institutions, and pension funds, fell to a three-year low of 13.12 per cent as of September 2021.
The same figure for the same period in the previous year stood at 13.94 per cent. However, promoters of some listed companies and domestic mutual funds have increased their stakes over the past quarter despite record valuations.
According to Prime, the analysis is based on the shareholding patterns filed by 1688 of the total 1732 companies listed on National Stock Exchange or NSE (main board) for the quarter ending 30 September 2021. The remaining companies were yet to file their shareholding data at the end of the quarter.
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