State-run Life Insurance Corporation of India (LIC), the country’s largest life insurer, is likely to invest close to Rs.2.7 trillion in the capital markets during the year to March 2017, said two people familiar with the plans.
Of this, about Rs.68,000 crore is likely to be invested in the equity markets in keeping with the insurer’s investment pattern under which it allocates 25-30% of its investible surplus to equity, they said.
According to a 9 March Mint report, prolonged market lows allowed LIC to invest at least Rs.60,000 crore on a gross basis during the past financial year that ended on 31 March. This was one of the highest investments by LIC in equities in the past 10 years.
In the same financial year, foreign portfolio investors pulled out Rs.14,172 crore on a net basis from Indian equities. Domestic institutional investors purchased shares worth a record Rs.80,433.3 crore in the cash (equity) segment in the year, according to the Securities and Exchange Board of India.
The volatility on display in the markets could actually work to LIC’s advantage, one of the two persons added.
“Markets have been choppy and may remain so for some more time going forward.”
“LIC is capable of taking contrarian calls unlike other players. It can invest in a falling market and divest in rising market, which others would typically not be able to do. And, it is critical to remember that all investments of LIC in equity are typically long-term in nature,” the first person said.
