Life Insurance Corporation of India cut its stake in publicly traded companies to a record low in the December quarter as the nation’s top institutional investor booked profits.
The shareholding of India’s largest insurer slumped to an all-time low of 3.67 percent of the market value of all publicly traded companies at the end of December from 3.69 percent in the September quarter, data compiled by Prime Database showed.
LIC’s shareholding in these companies was at a record high of 5 percent in June 2012. The shareholding data includes 278 companies where LIC’s stake exceeds 1 percent.
In value terms, LIC’s holdings in these companies was Rs 9.53 lakh crore at the end of December, an increase of 1.46 percent from the previous quarter.
“Profit-booking is the main reason behind LIC reducing its stake in the companies,” said Pranav Haldea, managing director of Prime Database Group. “LIC continues to command the lion’s share of investments in equities among insurance companies, with a 77 percent share.”
The highest increases in LIC’s holdings, in percentage terms, in the December quarter were in Power Grid Corporation of India, Dredging Corporation of India, Computer Age Management Services, Coforge, Deepak Nitrite, JSW Energy, Endurance Technologies, SBI Cards & Payment Services, PI Industries and Laurus Labs.
The 10 companies in which the insurer sold the most stake were IRB Infrastructure Developers, ABB India, Hindustan Motors, Sterlite Technologies, Hindustan Aeronautics, Bombay Dyeing & Manufacturing, Central Bank of India, Steel Authority of India, KEC International and Bharat Bijlee.
However, the data showed that the equity holdings of all insurance companies declined to a six-year low of 4.79 percent on December 31 from 4.81 percent a quarter ago.
Mutual funds’ shareholding of companies widened to 7.47 percent from 7.36 percent in the three months ended September after declining for five straight quarters – from March 2020 (7.96 percent) to June 2021 (7.25 percent). The share increased on the back of net inflows of Rs 51,909 crore in domestic mutual funds during the quarter, Haldea said.
The aggregate holding of domestic institutional investors increased to 13.22 percent from 13.12 percent in the second quarter of FY22. Mutual funds, insurance companies, banks, financial institutions, pension funds and other domestic institutional investors were net buyers of Rs 66,262 crore during the quarter.
The holdings of foreign institutional investors declined to a nine-year low of 20.74 percent on December 31 from 21.46 percent at the end of the September quarter amid net outflows of Rs 38,521 crore during the quarter.
“The top 10 percent companies by market capitalisation accounted for a huge 90.21 percent of overall FPI holding as on December 31, 2021 (down from 90.59 percent on September 30, 2021), 83.86 percent of overall DII holding (down from 84.15 percent on September 30, 2021) and 80.64 percent of overall MF holding (down from 81.2 percent on September 30, 2021), showing high levels of concentration in holdings of institutional investors,” according to the Prime Database report
Retail holdings (individuals with up to Rs 2 lakh shareholding) in companies listed on the National Stock Exchange of India reached an all-time high of 7.32 percent on December 31 from 7.13 percent a year earlier.
The Sensex and the Nifty indices declined by 1.48 and 1.5 percent, respectively, during this period, the Prime Database report added.