LIC pumps Rs 3000 crore in equities in first quarter

The Life Insurance Corporation of India (LIC) has invested over seven times more in equities in the first quarter of fiscal 2005 against the corresponding period in 2003-04.

Since the Sensex started falling since mid-April, LIC has made purchases of Rs 3,000 crore in the capital market. During the first quarter of last year, it had invested just about Rs 400 crore in the capital market.

For the entire fiscal 2004, the state insurance mammoth, the largest institutional investor, had made total purchases of Rs 7,000 crore "" majority of which was invested in the tainted Harshad Mehta shares and the number of initial public offerings (IPOs) that hit the market in March.

"We purchase when the market goes down and have invested Rs 3,000 crore since April 2004," said managing director R N Bhardwaj. The corporation booked a profit of Rs 2,450 crore from the capital market in fiscal 2004.

Of LIC's total investment worth Rs 3 lakh crore, about 9 per cent is invested in equity.

At the same time, the market capitalisation of LIC's portfolio has fallen by Rs 5,000-6,000 crore since the Sensex fell by 926 points since the beginning of April.

"The market capitalisation of our portfolio has fallen but not badly as we did not purchase much when the market was booming," said Bhardwaj.

As end of March 2004, LIC's equity investment stood at Rs 23,000 crore in terms of book value of investments. Mark-to-market, LIC's portfolio appreciated by over Rs 20,000 crore in fiscal 2004 to Rs 45,000 crore, said Bhardwaj.

"We are not perturbed by the erosion in the market capitalisation as we are long-term investors, and our investments are for 10-15 years. So long as the individual corporate performance is good, there is no cause for alarm," he added.

With the fall in the capital market, LIC increased its stake in some of the public sector banks including Allahabad Bank, Vijaya Bank and UCO Bank.

LIC had earlier reduced its holding in Oriental Bank of Commerce from 11 per cent to about 5 per cent. It also booked profits on the sale of some part of its holding in State Bank of India.