LIC dumped banks, top metal stocks in Q2; raised bets in 35

The country’s largest institutional investor has just gone light on most bank stocks and top metal firms, shifting its focus to what appeared to be the rural theme and the FMCG sector.

September quarter shareholding data showed Life Insurance Corporation of India (LIC) dumped bank stocks left, right and centre; from largest lender SBI to private sector leader ICICI Bank and other major PSU players such as Punjab National Bank, Bank of Baroda, Bank of India, Andhra Bank, Allahabad Bank, UCO Bank and Union Bank.

The insurance behemoth was seen reducing stakes in banks aggressively through the quarter. It cut stake in SBI to 8.15 per cent from 10.42 per cent.

Even tier-II lenders such as City Union Bank, Federal Bank, Karnataka Bank, YES Bank, J&K Bank, United Bank and UCO Bank saw brisk selling by the DII.

For some time now, Indian banks have been going through troubled times, saddled with nearly Rs 8.3 lakh crore of non-performing assets as of June end.

Crisil estimates addition of another Rs 3.3 lakh crore of bad assets this financial year, which would balloon their provisioning requirements, hurting bottom lines.

Dena Bank stood apart, as it saw the insurance major increase holding from 12.29 per cent as of June end to 14.25 per cent.

LIC is estimated to have an exposure of nearly Rs 30 lakh crore to domestic equities. This financial year alone, the DII pumped in some Rs 29,000 crore till the end of August.

The public sector insurance behemoth booked approximately Rs 20,000 crore profit on its equity portfolio last financial year and aims to surpass that mark this financial year.

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LIC in September said it paid Rs 2,206.70 crore to the government as surplus for financial year 2017, which was 15.8 per cent higher than the previous year’s figure.

For the year ending March 2017, the insurer had a surplus of Rs 44,134 crore, 16.14 per cent higher than Rs 38,000 crore surplus reported for the previous year. In FY16, LIC had also paid a Rs 500 crore one-time bonus to the government.

The insurer actively rejigged its portfolio this past quarter, trimming its holding in as many as 66 companies, while increasing it in 35 others.

Data available with corporate database Capitaline showed that LIC selectively offloaded stocks in many other sectors.

It lowered stake in engineering services firm ABB India from 8.46 per cent as of June end to 8.08 per cent as of September end, in BEML from 2.78 per cent to 1.82 per cent, in Bharti Airtel from 4.28 per cent to 3.96 per cent, in Exide Industries from 3.24 per cent to 1.83 per cent, in Hero MotoCorp from 4.21 per cent to 2.94 per cent and in Suzlon Energy from 1.73 per cent to 1.69 per cent. In Reliance Infrastructure, the insurer cut holding to 7.45 per cent from 9.07 per cent.

LIC dumped banks, top metal stocks in Q2; raised bets in 35

LIC also lightened its positions on several top metal stocks, including aluminium majors Hindalco and Nalco to 7.01 per cent and 13.20 per cent as of September end from 7.82 per cent and 14.46 per cent as of June end. Shares of both Hindalco and Nalco gained over 65 per cent over the past 12 months, following a spurt in metal prices in global markets.

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LIC dumped banks, top metal stocks in Q2; raised bets in 35

On the buy side, the insurance behemoth appeared to have raised its bets on the rural India theme, picking up chemicals and fertiliser stocks such as GHCL, National Fertilizer and RCF, besides two-wheeler firm Bajaj Auto and paints major Asian Paints. From the pharma pack, it picked Pfizer.

In all, the DII raised its holding in 35 companies, including in software firm Bosch, which its stake went up from 1.81 per cent to 2.32 per cent.

LIC also raised stake in Reliance Industries, the oil-to-retail conglomerate which has just entered India’s massive telecom market with a disruptive model and quickly seizing up a significant market share. The insurer’s stake in RIL went up to 8.08 per cent from 7.87 per cent as of June end. The stock has been hovering around its all-time high point at Rs 930.

Among others, oil refiner BPCL saw LIC holding go up to 2.43 per cent from 1.97 per cent, but in IndianOil it slipped to 6.41 per cent from 7.34 per cent.

LIC dumped banks, top metal stocks in Q2; raised bets in 35

Personal care and FMCG companies, considered likely beneficiaries of the GST, drew interest from LIC. Top FMCG stocks Dabur, Marico, Colgate-Palmolive, Hindustan Unilever, Nestle and P&G Hygiene all saw LIC holding go up during the quarter gone by. (See table).