LIC parks 35% more in stocks in FY 16, prefers defensives

MUMBAI: If Life Insurance Corporation of India’s stock selection in the recent past is any indication, investor preference is shifting to defensive stocks amid a slide in global equities and poor earnings visibility in manufacturing companies.

But the slide has not deterred the fancy of the biggest Indian institutional investor for stocks par say, as it has invested 35% more this fiscal so far as compared the last fiscal.

The insurer has been buying stocks in the pharmaceutical, technology and consumer goods sectors — normally considered good bets during times of crisis in stock markets — shunning big names in manufacturing and infrastructure sectors which are yet to see their businesses grow.

“We have invested Rs 53,000 crore in equity market this year mostly in IT, pharma and FMCG,” said S K Roy, chairman LIC. “Since the market is down, we are mostly buying.’’

Hindustan Unilever, Dabur, Tata Global Services, Cadila Healthcare, TCS and HCL Technologies are among the holdings of LIC, Bloomberg data shows. Although LIC is accused of being a passive fund manager, its sheer size and ability to buy when others seek an exit gives it the scope to benefit from market panics triggered by non-fundamental factors.

The company has been buying government bonds as well as they continue to provide high returns. It has invested Rs 1.5 lakh crore in government securities this fiscal, and another Rs 20,000 crore with the Indian Railways which has been enhancing its infrastructure.

LIC is also sounding a contra note in the markets on state-run banks which investors are shunning due to their stressed assets. “PSU banks are attractive at current valuations,’’ said Roy. “Even today there were reports that they are a good investment opportunity.”