New Delhi, Nov. 10: Life Insurance Corporation of India (LIC) and General Insurance Corporation (GIC) are bullish about their investments in the capital markets.
The two giant insurance companies, which are big players on the bourses, are optimistic of the current bull run continuing till the year-end and hope to book profits at higher margins in 2003-04.
“The market is upbeat due to various reasons. The operational profits of individual companies have shown good results. The sensex is reflecting the cost-cutting initiative of companies and showing an increase in valuations. We hope that the trend will continue,” LIC managing director R. . Bhardwaj said. “Obviously, it appears that there will be significant profit booking by most companies in this period,” he added.
GIC chairman P. C. Ghosh said, “Though equity trading occurs throughout the year, the margins of profit booking now will be reasonably high.”
LIC has booked a profit of about Rs 1,500 crore from trading in some of its investments in January-September. In January-March, when the sensex was ruling at 2,900, LIC had invested heavily in the equities market, while foreign financial investors (FII) were virtually absent. At that stage, LIC accounted for more than 10 per cent of the deliverable turnover in the market.
The company's total investments in the current financial year (up to July) amounted to Rs 30,000 crore, of which 74 per cent are in central government securities and 16 per cent in state government securities.
Earlier, the insurance monolith sold around 10 per cent stake in Associated Cement Companies, 1 per cent stake each in ITC Ltd, Bharat Petroleum Corporation and Grasim Industries. The corporation has also sold less than 1 per cent stake in Bajaj Auto, various Tata group firms and Hindustan Petroleum Corporation.
The total investment portfolio of GIC in 2002-03 was around Rs 9,000 crore. “We have booked profits in the range of Rs 250-300 crore in April-October. Profit churning is expected to be on the rise for the remaining part of the year. We believe sensex will not go below 4,800,” a senior official said.