The shareholding of Life Insurance Corporation of India (LIC) in the listed companies dropped to an all-time low in the January-March period of 2021 as India’s largest institutional investor booked profits, benefiting from the rally in stocks in the past year.
The ownership of LIC in publicly traded companies fell to an all-time low of 3.66 percent as of March 31, 2021, down from 3.70 percent as of December 31, 2020. LIC’s ownership hit an all-time high of 5 percent as of June 30, 2012, as per data compiled by Prime Database.
Sensex and Nifty rose by 3.70 and 5.10 percent respectively during the first three months of 2021.
"This was on account of profit booking by India’s largest institutional investor. In rupee value terms though, it reached an all-time high of Rs 7.24 lakh crore in the quarter ending March 31, 2021, an increase of 6.30 per cent over the previous quarter," said Pranav Haldea, Managing Director, PRIME Database Group.
LIC has been reducing its exposure to listed companies since June last year. LIC shareholding data includes companies where its stake is more than 1 percent.
LIC also continues to command a lion’s share of investments in equities by insurance companies (76 per cent share), Haldea added.
Holding of Insurance companies as a whole also declined to a 5 year low of 4.80 percent as of March 31, 2021 down from 5 percent as of December 31, 2020, as per the data.
However, in value terms, it rose by 3.09 percent from the previous quarter to an all-time high of Rs 9.48 lakh crore as of March 31, 2021.
Further, the holding of domestic Mutual Funds in companies listed on NSE also reduced to 7.23 percent at the end of March 2021 down from 7.42 per cent as on December 31, 2020.
According to Haldea, holding of Mutual Funds has now declined for four consecutive quarters, after 24 quarters of continuous rise (from 2.81 per cent as on March 31, 2014 to 7.96 per cent as of March 31, 2020).
Net outflows by domestic Mutual Funds stood at Rs 26,810 crore during the quarter, as retail investors booked profits. In INR value terms, the holding of domestic Mutual Funds increased by 4.81 percent to Rs 14.30 lakh crore as of March 31, 2021, from Rs 13.64 lakh crore on December 31, 2021.
During the quarter, Domestic Institutional Investors (DII) also decreased their stake in the listed companies to a 10 quarter low of 13.03 percent as against 13.56 percent in the December quarter. Net outflows from DIIs stood at Rs 23,124 crore during the quarter.
In INR value terms, DII holding rose to an all-time high of Rs 25.75 lakh crore as of March 31, 2021, an increase of 3.27 percent over the last quarter, the data showed.
Meanwhile, the holding of Foreign Portfolio Investors (FPIs) stood at 22.60 percent as of March 31, 2021, down from 22.74 percent as of December 31, 2020, despite net inflows of Rs 55,741 crore during the quarter, according to Haldea.
In INR value terms, FPI ownership also reached an all-time high of Rs 44.66 lakh crore, up 6.77 percent from Rs 41.83 lakh crore as on December 31, 2020.
The percentage holding of the Government (as promoter) in companies listed on NSE increased to 5.60 per cent as on March 31, 2021, from 5.22 per cent as on December 31, 2020.
Over a 12-year period (since June 2009), the holding has been steadily declining, from 22.47 percent as of June 30, 2009, due to the Government’s divestment programme, not enough new listings as also lacklustre performance of many CPSEs relative to their private peers, the data said.