IPO-bound LIC books record Rs 10,000 cr stock market profit

IPO-bound Life Insurance Corporation of India (LIC) booked record stock market profit of more than Rs 10,000 crore during the April-June period this year. 

The state-run insurer is the biggest domestic investor in Indian markets, purchasing shares worth Rs 94,000 crore in FY21 to hit a total stock market investment of Rs 8 lakh crore at the end of the fiscal year. 

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"Being a contrarian investor, LIC has the advantage of booking profits from shares that were bought many years back when there was hardly any other insurer. This is possibly the highest June-quarter profit," a source told the Mint, adding that LIC sold shares worth around Rs 20,000 crore in the first quarter of FY22, making a profit of over Rs 10,000 crore.

In the quarter ended June 30, when the second wave of the COVID-19 pandemic ravaged India with daily new case count surpassing 4 lakh at one point, markets soared over 6%, helping LIC book huge profits. The Centre is also expected to benefit from the record profit-booking and help it draw more investors to the state-owned insurer's mega-IPO in the works.

In April-June 2020, LIC booked a profit of a little more than Rs 7,000 crore. Between April and October 2020, the insurer booked around Rs 15,000 crore as profits in the capital market.

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In the June quarter, LIC slashed its stake in Housing Development Finance Corp (HDFC) Ltd by Rs 3,149 crore, based on Thursday's closing price. 

The state-run insurer offloaded shares of HDFC Bank Ltd, Hero Motocorp Ltd., and Biocon Ltd., during the same quarter. It also sold shares in several other listed companies. However, the shareholding patterns of just 17 such firms have been updated thus far.

LIC is mulling to invest over Rs 5 lakh crore in FY21, sources told the publication, half of which will go into government securities, 35% into equities, mutual funds, commercial papers, and non-convertible debentures, and 15% into infrastructure-related instruments.