LIC, MFs plough $2 bn into IT firms in Q4 as shares tumble

The state-run insurer invested the most in Infosys, Tech Mahindra, Wipro, HCL Tech

- Anirudh Laskar, Ram Sahgal & Mayur Bhalerao

Life Insurance Corp. of India (LIC) and asset management companies (AMCs) have purchased shares worth an estimated $2 billion in technology companies during the March quarter, a Mint analysis of stock exchange data showed.

This is the highest purchase by fund managers in a single quarter, based on the average price of shares traded during the period. The price is determined by the volume-weighted average price (VWAP), taking both volume and price into account.

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 ₹16,400 crore during the January-March period.

Simply put, VWAP can be explained thus: if a fund buys 1,000 shares at ₹10 apiece and another 500 shares at ₹12 apiece, the VWAP of the share is ₹10.66 (1,000X10) plus (500X12)/1500.

While LIC invested an estimated ₹5,930 crore in top tech firms, MFs raised their holdings in 45-odd listed IT, telecom and technology firms by an estimated ₹10,470 crore, according to the VWAP calculation.