LIC invests over Rs 8,000 crore in Sensex constituents during March quarter

Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble -- Warren Buffet

Life Insurance Corporation of India (LIC) seems to have put this in practice in the March 2016 quarter. It used the market volatility during this period to hike its stake in frontline companies from the S&P BSE Sensex, including Housing Development Finance Corporation (HDFC), HDFC Bank, Tata Motors, Tata Consultancy Services (TCS) and Maruti Suzuki India.

Of the 27 companies where shareholding pattern data for March 2016 is available, LIC upped its stake in 13 companies during the January - March quarter from the level seen in the preceding three months. In seven companies, the holding declined, while in the remaining seven companies their stake remained unchanged, showed an analysis of the shareholding pattern of the S&P BSE Sensex constituents.

"This is a well-known pattern. Whenever the markets are in a correction or a volatile phase, or even when the foreign institutional investors (FIIs) are selling, LIC comes in and buys / hikes stake in stocks of blue-chip companies. And the stocks it has hiked stake in the March 2016 quarter are good quality stocks. These stocks will do well and generate a good return for LIC. The move also acts as a counter-balance to the FII selling," says Dhananjay Sinha, head of Institutional research at Emkay Global Financial Services.

During the recently concluded quarter, LIC lapped up shares worth nearly Rs 10,000 crore in 13 Sensex constituents. At the same time, it sold shares worth Rs 1,852 crore in nine blue-chip companies, resulting in a net inflow of Rs 8,148 crore in all the Sensex firms together. Foreign institutional investors and mutual funds, on the other hand, made a net investment of around Rs 3,000 crore each during the quarter, the NSDL data shows.

By comparison, the Nifty 50 index and the S&P BSE Sensex lost 3% each during this period, and also hit their respective 52-week lows on February 29.

Meanwhile, data of 114 companies that comprise the BSE200 index obtained from Capitaline Plus reveals that LIC made a net investment of Rs 12,869 crore in the March quarter. Of this, it bought stocks worth Rs 16,084 crore in 47 companies and sold shares totalling Rs 3,215 crore in 24 companies.