life insurance corporation, An analysis by Bloomberg Intelligence suggests that the Indian government will face a global shift towards higher interest rates as its $128 billion stock portfolio is dominated by large companies in sectors such as financial and energy.
LIC is gearing up for the country’s biggest ever opening share sale in Mumbai, with a portfolio brimming with index heavyweights such as Reliance Industries Ltd and ITC Ltd. According to analysts Kumar Gautam and Nitin Chanduka, assets comprise about 3.6 per cent of India’s market capitalization.
LIC’s holdings include over 370 shares, but ownership is concentrated in 35 companies. Analysts say large caps account for over 75% of LIC’s investments, indicating that the portfolio may not be as diversified as it seems.
The analysts wrote, “The term risks of LIC’s equity portfolio appear low. They estimate that LIC’s investments are in financial and energy companies, which make up 23% and 16% of its portfolio, with periods 12 and 16.” Contrary to their valuations from current cash flows, Consumer Discretionary and Staples have a duration of about 19 years.
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