LIC's Rs 17.5 lakh crore portfolio goes against the wind: IT stocks in, banks out

Life Insurance Corporation of India (LIC) is staging a contrarian bet on India's beleaguered information technology (IT) sector, plowing thousands of crores into stocks that several other investors are frantically exiting even as the insurance behemoth slashes exposure to banking heavyweights and industrial giants.

The country's largest domestic institutional investor, which owns 283 stocks worth Rs 17.83 lakh crore, bought an estimated Rs 3,136 crore in Tata Consultancy Services (TCS) shares during the December quarter, according to data from Prime Database. LIC also snapped up Rs 2,293 crore in HCL Technologies and added Coforge to its portfolio in a bold wager that AI fears have pushed valuations to compelling levels.

The buying spree lifted LIC's IT sector holdings from Rs 1.82 lakh crore to Rs 2.17 lakh crore in just three months, with the sector's share of the portfolio jumping from 11.32% to 12.43% even as the stocks cratered up to 30% from their peaks.

The move puts LIC squarely at odds with the broader market, where fears that artificial intelligence will permanently disrupt India's outsourcing model have triggered relentless selling.

While LIC was buying tech, it was aggressively dumping financial services stocks. The insurer offloaded Rs 3,080 crore in the State Bank of India (SBI) in its single largest sale, followed by Rs 1,528 crore in HDFC Bank and Rs 1,173 crore in Bank of Baroda.

Financial services' share of LIC's portfolio contracted from 27.21% to 26.52%, even as the absolute value of holdings stood at Rs 4.64 lakh crore in December, remaining the largest sector allocation.

LIC also slashed Rs 2,442 crore in Larsen & Toubro (L&T) and Rs 2,367 crore in Reliance Industries, signaling caution on India's industrial and energy giants. Metals bore the brunt too, with Rs 2,307 crore dumped in Hindalco, Rs 1,491 crore in Vedanta, and a reduction in Steel Authority of India where LIC's stake fell from 10% to 9.18%.

The most dramatic shift came in Coforge, where LIC's stake exploded from less than 1% in September to 4.66% in the December quarter, one of the highest percentage increases across its entire portfolio. The midcap IT services company has been among the hardest hit in the sector rout, down over 30% from its 52-week high.

Other significant stake increases included NMDC, Voltas, Dr. Reddy's Laboratories, Astral, Indian Overseas Bank, Exide Industries, and JSW Energy.

Which other stocks did LIC bought or sold?

On the flip side, Adani Ports saw LIC's stake tumble from 7.73% to 6.79%, while Hindalco's collapsed from 6.18% to 4.92% and Vedanta's dropped from 5.7% to 4.97%. Bank of Baroda's stake declined from 6.64% to 5.84%.

Beyond IT, LIC deployed Rs 2,942 crore in Sun Pharma, its second-largest purchase after TCS. The insurer also bought heavily into NMDC, Bajaj Auto, and Coal India, suggesting continued faith in select public sector undertakings and domestic consumption plays.

Maruti Suzuki appeared on the sell list with Rs 1,147 crore offloaded, rounding out LIC's top ten exits alongside Adani Ports.

On an overall basis, LIC increased holdings in 73 NSE-listed companies during the quarter. The average stock price of these companies rose just 0.14% in the same period, suggesting the insurer is playing a longer game. LIC reduced holdings in 90 companies.

Whether the bet pays off depends on a question dividing the market: Is AI's impact on Indian IT services a temporary margin squeeze or a "Kodak moment" that permanently erodes the sector's economics? LIC appears to be wagering heavily on the former.

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