Tuesday, April 9, 2013


Its Earnings season again, and as usual, companies are reporting the shareholding pattern changes to the exchanges and this gives data hungry people like me some fodder to feed on. So let’s get started. Of course, this is still early stages and we will get more data as and when more companies come out with this mandatory requirement.

Around 10 of Nifty 50 companies have reported this data so far and to me, what really stands out is the kind of selling LIC has indulged in.

LIC has sold nearly Rs 3,000 crore of their investment in 6 Nifty stocks – Infosys, HDFC Bank, HUL, Cairn, BHEL and Bank of Baroda. To be fair, out of these, it has actually added investments worth Rs 540 crore in India

The largest selling from LIC is in case of Infosys. The corporation has sold 80 lakh shares in April-June quarter worth Rs 2,200 crore. Of course, they made a bit of killing on it since the stock came out of a bit of a bear market post its earnings and had a one way rally from Rs 2,200 to around 2,900 and LIC had been accumulating some of these shares at very low prices.

LIC has also sold nearly 1.4 crore shares of HDFC Bank worth Rs 260 crore; 1.3 crore shares of HUL worth Rs 650 crore and as I mentioned earlier, has bought 1.8 crore shares in Cairn India worth Rs 540 crores.

What really stands out is LIC action on BHEL and Bank of Baroda. The corporation has sold shares worth Rs 400 crores in these 2 underperforming PSU stocks.

Now, like everyone else, LIC is in stock markets to make money, preserve profits and cut losses – so nothing sinister in it. But then, you associate LIC with really long term investing, especially in blue chips and any kind of selling will attract suspicion – more so with the market being so dependent on institutional flows.

The big question is – would LIC have still sold so much in secondary market if it didn’t have to face an aggressive Govt calendar of PSU divestment? And this question becomes important at a time when LIC is actually pleading with regulators to remove the 10% cap on company specific investments

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