LIC to invest Rs. 2.40 trillion in Indian markets in FY24

In the last few years, if there has been one major domestic institutional investor that has influenced the direction of the market, it is the LIC. Consider the numbers. It has assets under management of Rs42 trillion. That makes the LIC larger than the entire Indian mutual fund industry which currently has AUM of around Rs40 trillion. With $500 billion of float available, the LIC remains a very key and formidable investor in the Indian markets, especially the equity markets. Its moves have not only been influencing but also long term in nature. LIC normally does not intervene in the day to day affairs of the company except for expressing its viewpoint where dividends or buyback prices are too low.

Now, the Life Insurance Corp. of India (LIC) has informally put across plans for its investment outlays for the year FY24. That is the period extending from April 2023 to March 2024. During this period, LIC plans to invest close to Rs2.40 trillion or nearly $30 billion into Indian financial markets. This will be across asset classes. These funds will be invested in the shares of locally traded companies, unlisted companies, bonds and debentures issued by companies, infrastructure funding for mega projects, funding support for large institutions etc. While the LIC does not put out any official numbers on such aspects, these are based on informal reports that have come in from the company sources.

The investment of Rs2.40 trillion is significant since it represents the largest ever allocation for investment by the LIC in any single financial year. This would not only help the insurer to maximize returns for policyholders and profits for shareholders but is also likely to work as a vital support system for Indian markets in FY2024. The markets are expected to be volatile as the lag effect of the SVB crisis and the Credit Suisse crisis are likely to continue. However, LIC also expects that the volatility should give them attractive entry points into the market, especially in the equity markets and also the bond markets. It would use its size to prise open such opportunities in the market.

According to preliminary estimates, nearly 35% of the total investment allocation or approximately Rs85,000 crore is likely to be allocated to investments in stocks in the secondary and primary markets. That would offer a substantial counterweight should the FPI selling persist in the coming fiscal also.