LIC’s market investments are well timed, apart from IRDA norms
The flickering diya, embalmed by two hands continues to be trusted by millions. It is perhaps this power of trust bestowed upon LIC (Life Insurance Corporation of India) that has given it a strong competitive edge over its peers; reasons enough why it continues to successfully dominate the insurance sector, despite so much of private and foreign money flowing in.
Policy holders normally associate LIC with safe, secure investment and risk cover. So it would come as a surprise to many that LIC, the ‘black horse’ of the stock market (interestingly, whenever the stock market is in a problem, LIC is one of the companies approached by the government to infuse liquidity) has decided to invest a whopping Rs.170 billion in the market when the Indian equity market is perhaps in one of its worst phases; given that FIIs have deserted it (for the last one year they have been net sellers to the tune of Rs.572.5 billion) and the Sensex has plummeted by almost 55%. Insurance instruments are often known for their aversion to markets, and this move might have caused many policy holders to wonder if LIC is actually taking a step in the right direction.
Well this has in fact been the trend for quite a while. T. S. Vijayan, Chairman, LIC comments, “Yes it (LIC’s exposure to equities) is continuously growing. I believe, of all the listed companies’ market capitalisation, there may be around 4% with us. It is huge money.” Actually, the current market scenario presents a unique platform to build a robust portfolio and hold stocks for two to three years. LIC has always been a ‘long term player’ and considering the fact that valuations are attractive, LIC is leaving no stone unturned to buy at the current lower prices.
The flickering diya, embalmed by two hands continues to be trusted by millions. It is perhaps this power of trust bestowed upon LIC (Life Insurance Corporation of India) that has given it a strong competitive edge over its peers; reasons enough why it continues to successfully dominate the insurance sector, despite so much of private and foreign money flowing in.
Policy holders normally associate LIC with safe, secure investment and risk cover. So it would come as a surprise to many that LIC, the ‘black horse’ of the stock market (interestingly, whenever the stock market is in a problem, LIC is one of the companies approached by the government to infuse liquidity) has decided to invest a whopping Rs.170 billion in the market when the Indian equity market is perhaps in one of its worst phases; given that FIIs have deserted it (for the last one year they have been net sellers to the tune of Rs.572.5 billion) and the Sensex has plummeted by almost 55%. Insurance instruments are often known for their aversion to markets, and this move might have caused many policy holders to wonder if LIC is actually taking a step in the right direction.
Well this has in fact been the trend for quite a while. T. S. Vijayan, Chairman, LIC comments, “Yes it (LIC’s exposure to equities) is continuously growing. I believe, of all the listed companies’ market capitalisation, there may be around 4% with us. It is huge money.” Actually, the current market scenario presents a unique platform to build a robust portfolio and hold stocks for two to three years. LIC has always been a ‘long term player’ and considering the fact that valuations are attractive, LIC is leaving no stone unturned to buy at the current lower prices.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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