The Indian stock market may have seen its cycles of volatility over the past few quarters, and Life Insurance Corporation of India (LIC) lost Rs 22,506 crore in equity holding value between March and June.
Data compiled by Moneycontrol showed that LIC's equity holding value was at Rs 5.98 lakh crore at the end of the June quarter of FY20.
However, LIC – India’s largest insurer – has seen a 62.7 percent rise in the value of its equity holding over the past three years. The value rose by Rs 74,781 crore in FY19 itself.
Between June 2016 and June 2019, the value of LIC's equity holding rose by almost Rs 2.31 lakh crore. This is amidst talks that LIC wanted to keep equity investments below Rs 60,000 crore every year.
During the same period the BSE Sensex moved from 26,999.72 to 39,394.64.
While investing in the equity markets, LIC follows a “contrarian” investment strategy, which is “sell” when the sentiment is bullish and “buy” when the mood is bearish.
One of the largest equity investors in the country, LIC invests between Rs 50,000 crore to Rs 60,000 crore every year (net) in the markets every year. Being a life insurance company, LIC is required to invest a larger proportion of its portfolio into debt securities.
At the end of FY19, LIC's balance sheet size rose to Rs 30.5 lakh crore compared to Rs 27.9 lakh crore in the year-ago period. It had Rs 4.57 lakh crore worth of equity investments in its policyholders account.
Sources said that, in FY20, LIC might look to keep its net equity investments below Rs 65,000 crore.
It is already a majority shareholder in IDBI Bank holding 51 percent equity stake. LIC invested Rs 21,600 crore in the Bank in FY19, and this year, the insurer has put in Rs 4743 crore under capital infusion.
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