India’s largest institutional investor and insurer Life Insurance Corp of India (LIC) has raised its stake in IT bluechip Tech Mahindra Ltd to 8.88% from 6.87% since November, highlighting domestic fund managers’ growing interest in Indian tech equities against a weak dollar and lower-than-expected market valuation.
LIC’s increased stake in Tech Mahindra is currently worth Rs. 9,484.2 crore, the company stated.
On 8 May, Mint reported that LIC and Indian asset management companies (AMCs) bought shares worth an estimated $2 billion in technology companies during the March quarter alone, according to a Mint analysis.
LIC invested around Rs.5,930 crore in leading tech firms, while mutual funds (MFs) increased their stakes in about 45-odd listed IT, telecom and tech firms by an estimated Rs.10,470 crore, based on volume-weighted average price (VWAP) computations. This marked the highest single-quarter buy by fund managers.
On Wednesday, LIC said in a filing that it bought 19.6 million shares worth ₹2,063 crore in Tech Mahindra between 21 November and 6 June at an average price of ₹1,050.77 apiece.
An analysis showed that during the March quarter, apart from Infosys, the state-run insurer invested the most in Tech Mahindra, Wipro, Mphasis Ltd, HCL Technologies, TCS, Coforge, L&T Mindtree, Bharti Airtel and in L&T Technology.
In October 2022, LIC had increased its stake in Tech Mahindra from 4.86% to 6.87% at an average cost of ₹1,042.24 per share.
Fund managers are continuing to bet on Indian IT and technology stocks as most IT companies have declared a weak performance during the March quarter due to seasonality and the weak dollar. This is because a large portion of the revenues in Indian IT and technology firms comes from sales that are calculated in US dollar terms.
During FY23, shares of companies on BSE’s IT index lost 22%, while in the March quarter, it fell by 0.67%. Companies on BSE’s Telecom index lost 13.35% in the March quarter, while for the full fiscal, it fell by 18.4%. Similarly, stocks on BSE’s Technology index lost 20.12% in FY23, while falling by 3.25% in the March quarter.
As stocks of IT, telecom and technology companies kept falling over their declining margins, below-par financials and a weakening dollar, the country’s mutual fund managers and insurance behemoth LIC rushed to increase their holdings in these companies by an estimated Rs.16,400 crore during the January-March period.
LIC, in the March quarter, has invested at least Rs.2,540 crore in Infosys alone, while MFs bought additional shares worth Rs.2,938 crore in the IT major.