LIC to bolster Indian Equity Market with its Investment Plan

India’s largest life insurer and also the largest domestic investment institution, Life Insurance Corporation of India (LIC) plans to invest Rs 31,000 cr in equities and corporate bonds in the next four months. Out of the total amount, LIC would invest Rs 11,000 cr in stocks and Rs 20,000 cr in non-convertible debentures. LIC could bolster the equity markets, especially at a time when FIIs are selling off causing huge declines in the market. Even the insurer has been affected by the slump in the equity markets, with it seeing a fall in unit-linked policies, even though traditional policies such as endowment policies appear to be staging a comeback. LIC may invest a total of Rs 40,000 cr in equities during the current fiscal, although it is still awaiting a reply from IRDA on its request to hike the cap on investment in an individual company.

The company plans to use mobilisation from its new scheme, Jeevan Aastha, which guarantees benefits on maturity and death, to invest in debt instruments as returns are guaranteed. Of the Rs 25,000 cr it has targeted from the new scheme, 50% will be invested in government bonds while the balance will be invested in other debt instruments. The company this year has seen a definite increase in the number of corporates approaching it for investment especially in NCDs and rated papers.

Until, November this year, LIC has invested Rs 1,02,476 cr compared with Rs 97,738 cr a year ago. This break-up includes Rs 36,311 cr in government bonds, Rs 23,190 cr in debentures and bonds, Rs 12,372 cr in infrastructure, Rs 1,342 cr as project loans, Rs 164 cr in IPOs ( a relatively small amount reflection the mood of the IPO market in the country) and Rs 29,000 cr in equities (secondary market).