LIC's Rs 17.5 Lakh Crore Portfolio Goes Against the Wind: IT Stocks in, Banks Out

Why It Matters

LIC’s contrarian tilt signals confidence in a post‑AI recovery for Indian IT and could steer other large investors, while its bank divestments underscore shifting risk appetites in a volatile financial sector.

Key Takeaways

• LIC added ~₹5.4 bn to top IT firms.
• IT sector weight rose to 12.43% of portfolio.
• Sold ₹5.8 bn in major banks this quarter.
• Reduced exposure to L&T, Reliance, and metals.
• Bet assumes AI impact is temporary, not structural.

Pulse Analysis

LIC’s portfolio overhaul highlights the insurer’s willingness to act as a market contrarian, a trait not often associated with such a massive, traditionally risk‑averse holder. By allocating billions to IT leaders at a time when peers are fleeing, LIC is betting that current valuation discounts, driven by AI‑related margin fears, are temporary. This stance may encourage other long‑term investors to reassess the sector’s fundamentals, especially as global tech spend rebounds and Indian firms continue to dominate cost‑effective software delivery.

The Indian IT sector has faced a sharp sell‑off, with many stocks down 20‑30% from peak levels as investors worry about AI disrupting the outsourcing model. However, the underlying growth drivers—digital transformation, cloud migration, and a robust talent pipeline—remain intact. LIC’s sizable purchases of TCS, HCL and the mid‑cap Coforge suggest confidence that earnings will stabilize once AI integration costs subside, and that valuation gaps present an entry point for patient capital. Compared with peer institutions that are trimming exposure, LIC’s move could provide a price floor and add liquidity to a market searching for direction.

Conversely, the insurer’s aggressive exit from banking and heavy‑industry names reflects a recalibration of sector risk. Large‑cap banks like SBI and HDFC have shown earnings pressure from higher funding costs and non‑performing assets, while industrials such as L&T and Reliance face macro headwinds from slowing commodity demand. By reducing these holdings, LIC is likely preserving capital for higher‑growth bets and insulating the portfolio from potential credit stress. The net effect is a more technology‑lean, consumption‑oriented allocation that may outperform if IT earnings rebound and the broader economy sustains domestic demand.

LIC's Rs 17.5 lakh crore portfolio goes against the wind: IT stocks in, banks out

By Nikhil Agarwal, ETMarkets.com · Last Updated: Feb 18 2026, 09:10 AM IST

LIC is making a bold contrarian move, investing heavily in India's IT sector despite market fears over AI.

The Life Insurance Corporation of India (LIC) is staging a contrarian bet on India's beleaguered information technology (IT) sector, plowing thousands of crores into stocks that several other investors are frantically exiting even as the insurance behemoth slashes exposure to banking heavyweights and industrial giants.

The country's largest domestic institutional investor, which owns 283 stocks worth Rs 17.83 lakh crore, bought an estimated Rs 3,136 crore in Tata Consultancy Services (TCS) shares during the December quarter, according to data from Prime Database. LIC also snapped up Rs 2,293 crore in HCL Technologies and added Coforge to its portfolio in a bold wager that AI fears have pushed valuations to compelling levels.

The buying spree lifted LIC's IT sector holdings from Rs 1.82 lakh crore to Rs 2.17 lakh crore in just three months, with the sector's share of the portfolio jumping from 11.32 % to 12.43 % even as the stocks cratered up to 30 % from their peaks.

The move puts LIC squarely at odds with the broader market, where fears that artificial intelligence will permanently disrupt India's outsourcing model have triggered relentless selling.

While LIC was buying tech, it was aggressively dumping financial‑services stocks. The insurer offloaded Rs 3,080 crore in State Bank of India (SBI) in its single largest sale, followed by Rs 1,528 crore in HDFC Bank and Rs 1,173 crore in Bank of Baroda.

Financial services' share of LIC's portfolio contracted from 27.21 % to 26.52 %, even as the absolute value of holdings stood at Rs 4.64 lakh crore in December, remaining the largest sector allocation.

LIC also slashed Rs 2,442 crore in Larsen & Toubro (L&T) and Rs 2,367 crore in Reliance Industries, signalling caution on India's industrial and energy giants. Metals bore the brunt too, with Rs 2,307 crore dumped in Hindalco, Rs 1,491 crore in Vedanta, and a reduction in Steel Authority of India where LIC's stake fell from 10 % to 9.18 %.

The most dramatic shift came in Coforge, where LIC's stake exploded from less than 1 % in September to 4.66 % in the December quarter, one of the highest percentage increases across its entire portfolio. The mid‑cap IT services company has been among the hardest hit in the sector rout, down over 30 % from its 52‑week high.

Other significant stake increases included NMDC, Voltas, Dr. Reddy's Laboratories, Astral, Indian Overseas Bank, Exide Industries, and JSW Energy.

Which other stocks did LIC buy or sell?

On the flip side, Adani Ports saw LIC's stake tumble from 7.73 % to 6.79 %, while Hindalco's collapsed from 6.18 % to 4.92 %, Vedanta's dropped from 5.7 % to 4.97 %, and Bank of Baroda's stake declined from 6.64 % to 5.84 %.

Beyond IT, LIC deployed Rs 2,942 crore in Sun Pharma, its second‑largest purchase after TCS. The insurer also bought heavily into NMDC, Bajaj Auto, and Coal India, suggesting continued faith in select public‑sector undertakings and domestic consumption plays.

Maruti Suzuki appeared on the sell list with Rs 1,147 crore offloaded, rounding out LIC's top ten exits alongside Adani Ports.

On an overall basis, LIC increased holdings in 73 NSE‑listed companies during the quarter. The average stock price of these companies rose just 0.14 % in the same period, suggesting the insurer is playing a longer game. LIC reduced holdings in 90 companies.

Whether the bet pays off depends on a question dividing the market: Is AI's impact on Indian IT services a temporary margin squeeze or a “Kodak moment” that permanently erodes the sector's economics? LIC appears to be wagering heavily on the former.

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