LIC has booked record equity share trading profits of Rs.25,000 crore in the financial year 2017-18, up from Rs.19,000 crore a year ago, according to sources.
LIC held equity assets (including shares and mutual funds) worth Rs5 trillion at the end of December, and the trading profits approximate 5% of assets under management. In 2015-16, LIC had booked Rs.11,000 crore profit from equities trading.
“The stock market was mostly buoyant during the year and LIC got enough selling opportunities,” said one of the sources.
Except for the March quarter, the market recorded gains in all the quarters during the financial year. The Sensex lost 3.20% or 1,088.15 points during the quarter ended on 31 March.
LIC’s record profit booking is a positive signal for the market if the insurer enhances its market exposure at the same time. LIC bought equities worth some Rs.80,000 crore.
Record profit booking by LIC will mean the insurer will not only be able to credit better bonuses to with-profit type of policy holders and pay better dividends to the government, but also be able to pump in more money into the markets. And, if LIC invests more money into the market, it improves the liquidity and the market goes up—which, in turn, improves the NAV for unit-linked investment policy (ULIP) holders.
“Secondary market was good. The primary market too was better than last year, which gave LIC a lot of opportunities to buy. Excluding share purchases in initial public offerings (IPOs) and divestment issues by the government during the financial year, LIC bought equities worth Rs60,000-65,000 crore,” said this person.
