India's largest institutional investor Life Corporation of India (LIC) has ventured into one of the hotly-contested segments of Dalal Street, with the insurer making fresh investments worth thousands of crores of rupees in the IT sector in the June quarter.
While analysts have turned cautious, the country’s largest life insurer has shown confidence in the IT space by pumping in Rs 8,000 crore in some of India's biggest tech companies.
LIC bought shares worth Rs 3,636 crore in Infosys, Rs 1,973 crore in Tata Consultancy Services, Rs 1,468 crore in Tech Mahindra and Rs 979 crore in HCL Technologies, according to a Prime database report.
The Indian IT industry has hit a rough patch, battling stagnant revenue and profit growth fuelled by fears of a slowdown in the US and Europe, its biggest markets, as rising interest rates bite.
LIC's investment approach was deeply rooted in a long-term philosophy, Kranthi Bathini from WealthMills Securities said. "Valuations have emerged as appealing prospects, even in the face of persistent global macro challenges," he added.
In the June quarter, the insurance giant, which reported a 14-fold surge in profit at Rs 9,543 crore, sold shares worth Rs 1,932 crore in Bajaj Auto.
As on June 30, 2023, LIC's total holding was at Rs 11.16 lakh crore. It held Rs 2.88 lakh crore worth of shares in financial services firms, which formed the biggest part of its portfolio. FMCG companies were next, with Rs 1.29 lakh crore worth of investment. IT companies together accounted for Rs 14,671 crore.
LIC can allocate a maximum of 30 percent of its investible funds to the stock market. This limit, initially set at 10 percent, was raised in November 2021 aligning with the government's efforts to meet its disinvestment target.
In addition to the 30 percent limit, LIC has to adhere to several other restrictions related to its investments in the stock market. It cannot allocate more than 10 percent of its investible funds to any individual company.
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