Life Insurance Corporation of India (LIC) Chairman S. K. Roy said he was "very bullish" about the banking, pharmaceutical, metals and IT outsourcing sectors because of expectations for a cyclical recovery and a stabilising rupee currency. LIC, India's most powerful investor, is also positive on the capital goods sector, Roy told Reuters in an interview at his office in Mumbai.
Roy, who was appointed chairman of the state-run insurer in June last year, added it was looking to develop its existing holding of more than 70 land plots in phases over the next three to five years, either for commercial or residential purposes.
Insurance companies in India have traditionally held large land parcels in their portfolios as a means for diversifying investments.
The strong endorsement from LIC, with Rs 17.69 trillion($290.29 billion) of assets under management, showcases the increased confidence of domestic investors in their own country after months of caution.
Indian shares have rallied to record highs this year, while bonds and the rupee have also surged, but the bulk of gains had been driven by foreign investors.
"There are a large number of sectors about which we are very confident this year," Roy said.
"That's based upon our outlook for the Indian economy and how these companies are likely to do." Roy, who has been with the insurer more than three decades, added he saw few red flags for markets because of the government's commitment to contain the fiscal deficit and receding concerns about lower rainfalls in the monsoon period.
LIC plans to invest Rs 3 trillion in markets this year, of which 550 billion will be in shares.
The bulk of its investments will go to government bonds, traditionally its biggest allocation. Roy added LIC was headed for a "very good year", both in terms of its market investments and its core insurance business.
The chairman said he expected growth of 12 per cent in insurance premiums this fiscal year, in line with 13.4 per cent last year.
Domestic investors are increasingly regaining their confidence in India after the country suffered its worst market turmoil since the 1991 balance of payment crisis.
The election of Prime Minister Narendra Modi along with the Reserve Bank of India's commitment to contain inflation have sparked the improved confidence.
The country has also seen its current account deficit narrow sharply thanks to measures imposed by the previous Congress government, including curbs on gold imports.
Equity mutual funds have seen Rs 194.42 billion ($3.19 billion) in inflows this year, after two consecutive years of outflows. ($1=Rs 60.94 )
(Additional reporting by Aditya Kalra in NEW DELHI, and Devidutta Tripathy, Abhishek Vishnoi in MUMBAI; Editing by Matt Driskill)
