LIC Aggressively Buys Stocks Worth Rs 16,578 Crore; But Market Expansion Pushes Share to All-Time Low

LIC Aggressively Buys Stocks Worth Rs 16,578 Crore; But Market Expansion Pushes Share to All-Time Low​

India’s flagship institutional investor, Life Insurance Corporation (LIC), deployed massive capital into its top stock additions during the June quarter, buying shares worth an estimated Rs 16,578 crore across ten key companies. This aggressive portfolio deployment failed, however, to halt a major trend: LIC's share of NSE-listed equity market fell to an all-time low, underscoring the rapid expansion pace of India’s broader stock markets relative to its massive holdings.

Top Stock Acquisitions and Portfolio Growth​

The quarter saw LIC prioritize high-growth blue chips in its most significant purchases. Bharti Airtel led the way, attracting a buying value of Rs 2,721 crore. LIC increased its holding in the telecom giant by nearly 1.47 crore shares to 25.82 crore as of June 30.

Maruti Suzuki and ITC followed closely behind, with purchases valued at Rs 2,267 crore and Rs 1,742 crore, respectively. LIC added approximately 17.02 lakh Maruti shares and 5.84 crore ITC shares during the three-month period. The buying in these sectors occurred while Maruti shares advanced 14.7%, though ITC slipped 0.26%.

Other significant purchases included Kotak Mahindra Bank (Rs 1,520 crore) and UltraTech Cement (Rs 1,491 crore). Reliance Industries, Bajaj Finance, and Lupin also saw large investments from LIC, with purchases valued at Rs 1,425 crore, Rs 1,414 crore, and Rs 1,375 crore.

Major Portfolio Pruning and Asset Allocation Shifts​

While the buying spree was aggressive, portfolio pruning represented another key activity for LIC. The insurer sold shares worth an estimated Rs 13,406 crore across its ten biggest stock reductions, led by Coal India and State Bank of India (SBI).

Coal India saw the largest reduction in holdings at Rs 2,271 crore after LIC cut nearly 4.97 crore shares. SBI followed with a sale worth Rs 2,198 crore as the company reduced its holding by 2.15 crore shares to 78.14 crore. LIC also divested shares in HUL (Rs 1,681 crore), Steel Authority of India (SAIL) (Rs 1,497 crore), and Tata Steel (Rs 1,415 crore).

The selling activity was partially offset by strong stock performances. Bharat Forge advanced 28% during the quarter, while Nestle India gained 20%, SAIL rose 14.6%, and ICICI Bank climbed 14%. Conversely, ONGC declined 17.5%, Coal India fell 2.5%, and Tata Steel slipped 2%.

Market Share Dynamics and Sectoral Rebalancing​

Across the broader portfolio tracked, LIC maintained a net buying position of estimated Rs 8,137 crore during the quarter. Its holdings increased in 54 NSE-listed companies but declined in 114. The stocks where LIC raised exposure gained an average of 11.19%, while those it reduced advanced by an average of 19.52%.

Despite this net buying, LIC’s market share by value dropped to a historic low of 3.48% as of June 30, down from 3.72% at the end of March. This decline was attributed to the faster expansion rate of the wider listed market.

Financial services cemented its position as LIC's biggest sector exposure, increasing in value by Rs 55,288 crore to reach Rs 4.40 lakh crore. This boosted the financial sector’s portfolio share to 26.99% from 25.41%. Conversely, LIC's IT holdings decreased by Rs 22,067 crore, cutting the sector’s weight to 9.18% from 11.35%.

Key Holdings and Corporate Deep Dive​

Reliance Industries remains LIC’s largest single stock holding by value at Rs 1.18 lakh crore. SBI is also a dominant position, valued at Rs 80,243 crore, followed closely by Larsen & Toubro at Rs 70,124 crore. ITC, HDFC Bank, and Bharti Airtel complete the list of its top ten equity holdings.

LIC significantly increased exposure to several companies. It more than doubled its holding in Central Bank of India (CBIL) to 6.44% from 3.16%. The insurer also raised stakes in General Insurance Corp. to 11.65%, Lupin to 4.09%, Oil India to 8.08%, and IRFC to 3.54%.

Investor Outlook and Strategic Guidance​

Financials, industrials, and capital expenditure (capex)-linked businesses emerge as preferred investment areas according to experts. Sandeep Neema of PL Asset Management cautioned against trying to time the market, advocating instead for using volatility to increase exposure to well-managed businesses. He noted that most macroeconomic headwinds are priced in due to policy stability and rising corporate profitability.

Prateek Agrawal of Motilal Oswal Asset Management stated that India’s valuation premium over emerging markets has dropped to a 10-year low, suggesting valuations are more aligned with historical trends. Both banks and IT stocks could appeal to value investors following their recent corrections, although Agrawal maintains a preference for higher-growth segments.

ASK Investment Managers noted robust earnings across the sector, with sales increasing 22% from a year earlier in the first quarter among the 256 NSE 500 companies that reported results. However, amidst disagreement over IT, Agrawal views the correction as an opportunity for value investors, while Neema remains conservative due to weakening global demand and AI disruption risks.