LIC Rebalances Equity Portfolio Amid Market Volatility in Q2 FY26

India’s biggest state-owned insurer, Life Insurance Corporation of India (LIC), has emerged as a key stabilising force in the stock market in the September quarter of 2025, deploying substantial capital in equities even as broader indices slumped. During the period, LIC made net equity purchases of over ₹21,700 crore, raising its stakes in 76 listed companies, reducing exposure in 81 firms, and adding 13 fresh names to its portfolio.

Despite this aggressive activity, LIC’s overall listed-equity portfolio value slipped 1.7% to ₹16.09 lakh crore by end-September from ₹16.36 lakh crore at end-June, reflecting the broad market correction.

At the end of the quarter, Life Insurance Corporation of India held positions in 322 listed companies.

Strategic Bets: Major Increases and Decreases

The insurer made sizable purchases across large-cap, high-visibility companies – a clear sign of confidence in India’s corporate blue-chip segment. The biggest addition: SBI, in which LIC picked up 6.42 crore additional shares valued at about ₹5,599 crore. Other major increases were:

• Sun Pharmaceuticals: ₹3,226 crore
• HCL Technologies: ₹2,939 crore
• Pidilite Industries: ₹2,234 crore
• Coal India: ₹2,119 crore
• NTPC: ₹1,992 crore
• Tata Motors (Passenger Vehicles): ₹1,904 crore
• Cipla: ₹1,686 crore
• Tata Consultancy Services (TCS): ₹1,654 crore

On the sell side, LIC trimmed holdings in several major names:

• HDFC Bank: ₹3,130 crore
• ICICI Bank: ₹2,338 crore
• Larsen & Toubro (L&T): ₹2,243 crore
• Bharti Airtel: ₹2,205 crore
• Mahindra & Mahindra: ₹2,149 crore
• Maruti Suzuki: ₹2,052 crore
• Kotak Mahindra Bank: ₹1,994 crore

Among newly added stocks, Life Insurance Corporation of India took positions in:

• BSE Ltd: ₹4,637 crore (2.28 crore shares)
• Yes Bank: ₹2,653 crore
• ABB India: ₹2,424 crore

Also added: Varun Beverages (₹1,982 crore), Shriram Finance (₹1,492 crore), and Persistent Systems (₹819 crore).

Meanwhile, LIC’s name dropped from the shareholding pattern in 31 companies — whether due to complete exits or holdings falling below the 1% reporting threshold is unclear. These included NMDC Ltd (previous holdings ₹3,402 crore), Coforge Ltd (₹3,398 crore), and Eicher Motors (₹2,943 crore). Reductions or exits also impacted Apollo Hospitals (₹2,258 crore), TVS Motor (₹1,583 crore), Piramal Enterprises (₹1,583 crore), HDFC AMC (₹1,162 crore), and Dixon Technologies (₹972 crore).

Why This Activity Matters

Stabiliser during volatile markets:
In the September quarter, the BSE Sensex fell about 4%, while the Nifty 50 slipped 3.6%. The MidCap and SmallCap indices lost 4.5% and 4.2%, respectively. In this uncertain environment, LIC’s large-scale buying provided a counterbalance to foreign institutional investor (FII) exits, reinforcing its role as a stabiliser. By focusing on large-cap, high-quality names, the insurer signalled confidence in foundational Indian corporates and structural growth themes, including SBI, Sun Pharma, HCL, and TCS.

Portfolio rebalancing and strategic shifts:
Trimming exposure in banks like HDFC Bank and ICICI Bank and exiting some mid- and small-cap names indicate LIC’s effort to fine-tune its risk exposure. At the same time, selective investments in new opportunities such as BSE Ltd and Yes Bank reflect a targeted reallocation strategy.

Risks & Portfolio Challenges

Despite significant purchase volumes, the value of LIC’s listed-equity portfolio declined, showing how challenging it is to navigate a broadly down market — even for major institutional players.

• Concentration risk: Large bets on select names could expose LIC to company-specific risks if corporate performance falters.
• Liquidity and valuation risk: Many LIC portfolio stocks have underperformed — external data suggest over 70% of its holdings are down up to 70% year-on-year — highlighting exposure to valuation risks.
• Governance and accountability: As a public-sector insurer with social responsibilities, LIC’s equity allocations are subject to scrutiny, especially in areas of investment logic, risk management, and organisational priorities.

What This Means for Retail Investors and Markets

For retail investors, LIC’s moves offer cues: large-cap and high-quality companies continue to attract institutional conviction, which may guide individual investment strategies. For markets, LIC’s role in providing liquidity and halting potential declines is crucial. However, the broader trend of underperforming stocks shows that diversification and valuation discipline remain key selection factors.

Conclusion

In a turbulent quarter for Indian equities, LIC deployed over ₹21,700 crore in net equity purchases while recalibrating its portfolio composition. This marks an evolution from being a passive holder of large-caps to an active market participant, aligned with long-term structural themes and risk-adjusted strategies. While challenges persist, LIC’s rebalancing move during a downturn underscores its dual role: anchoring domestic markets and pursuing long-term value amid low sentiment. As India’s equity landscape continues to evolve, LIC’s market moves will likely be watched not just for what it holds, but for what they signal about the future direction of India Inc.