LIC buying in big way........

The latest figures reveals that LIC and ICICI prudential were more then equal buyer then FII selling…
FII sold over $bn in 1st qr of 09 and LIC and ICICI prudential were buyer more then that.

Read on:

LIC, ICICI Prudential invest Rs 13,000 crore and Rs 2,000 crore respectively in the first quarter of FY09.
Insurance companies have emerged as the big boys of Dalal Street with Life Insurance Corporation (LIC) alone investing around Rs 13,000 crore in the first quarter of 2008-09.
The largest private insurer ICICI Prudential bought equity worth Rs 2,000 crore during the same period.
According to Sebi data, foreign institutional investors have sold Rs 14,000 crore in the first quarter this year.
There is no data on the equity investments of life insurance companies as a whole. But they have been the biggest buyers among the domestic institutions, according to company executives.
With insurance companies reporting sustained double-digit growth in new sales and unit-linked insurance plans (Ulips) holding their own, the investment from the segment continues to remain robust.
"We look at the long term economic growth prospects for India. We do not take long-term equity buying decisions based on short-term volatility," said ICICI Prudential Life Insurance Executive Director NS Kannan.
"We will confine (our purchases) to NSE's CNX-Nifty and junior Nifty," added an LIC executive.
LIC is expected to invest around Rs 60,000 crore in the stock markets this year compared to around Rs 42,000 crore in 2007-08. Its investible corpus is expected to climb up from last year's Rs 1,50,000 crore to over Rs 1,75,000 crore this year.
A Bajaj Allianz Life Insurance executive said the company is hoping to invest around Rs 2,000 crore in equities during the current financial year.
Max New York Life has invested around Rs 500 crore in equities so far this year and expects to invest a similar amount till December.
Max New York Life Managing Director & Chief Executive Officer (CEO) Gary R Bennett said the bias in favour of equity was still strong.
"Currently, we are noticing a strange phenomenon. Our customers are increasingly switching from balanced options to equity, as the general expectation is that the market has bottomed out," added SBI Life Managing Director & CEO US Roy.
"A bear market cycle is a fantastic buying opportunity, subject to the right choice. In the first six months of this year, Ulips constituted 85 per cent of the products sold by us," Bennett told Business Standard.

My Commnets:

This shows that all the selling were absorb by our local MF .Viz LIC and ICICI Prudential funds.
What we have to analyse from this?It is clear that though the selling was absorbed by LIC and ICICI market tanked in big way….it means bears has borrowed some stocks and sold in the market to buy it later at lower price and make a killing….
Well,when the stocks sold to Institution like LIC and ICICI insurance arm these are long term money and hence they will not sell at lower the prices from where they have bought.It means that a good positive reason and market can explode…..
Well, these are all analysis and it may go wrong in a big way……
According to the figures given above,LIC has invested Rs 13000 cr in 1st qr and ready to invest more 29000 cr in rest of the year.Means total investment from LIC would be Rs 42000 cr which is almost 70% of what FII use to invest since last 4-5 yrs, every year.
The insurance business is a very lucrative business as the institution has to pay less and gets premium in huge instalements.No wonder BERKSHIRE HATHAWAY INC of Warren Buffet is having an Insurance arm and that is the only business which is making a lucrative business in Warren Buffets portfolio and will remain doing it for ever.
Well, I do not say that there is no slow down in economy but the effect is much much more then it should be. Our market need not have this catastrophic effect.
As market use to discount future atleast 6 months before it happens , as I have always written that “don’t look at present earning”as it is the future earning and growth that market discounts and not the present earning.So don’t be amazed when some stocks are going up and results and earning are not matching up……
So it can also be assumed that market may be now discounting the slow growth and may bounce back strongly when tide turns.
We have seen in past that when tide turns, it turns very fast.If inflation is now almost at the peak and crude can come down, bears are in for a bad drubbing….
Let us see what happens…..