LIC uses market volatility to raise stake in companies

Life Insurance Corporation of India has used market volatility during the March quarter to raise its stake in companies on the Sensex, including Housing Development Finance Corporation (HDFC), HDFC Bank, Tata Motors, TCS (Tata Consultancy Services), and Maruti Suzuki.

Of the 27 companies where shareholding pattern data for the March quarter is available, LIC raised its stake in 13 companies during the January-March quarter from the level seen in the preceding three months. In seven companies, the holding declined, while in the remaining seven the stake remained unchanged.

“This is a well-known pattern. Whenever the markets are in a correction or a volatile phase, or even when the foreign institutional investors (FIIs) are selling, LIC comes in and buys or raises stake in stocks of blue-chip companies. And the companies it has raised stake in the March quarter have good stocks. These stocks will do well and generate a good return for LIC. The move also acts as a counter-balance to the FII selling,” says Dhananjay Sinha, head of institutional research at Emkay Global Financial Services.

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