# MUST READ HOW LIC MADE 220 CRORE (gain of 500 per share without any tax) At the end of December 2012 quarter, LIC held 4.16 cr shares of Infosys representing 7.2% stake. By the end of March quarter, this was down to 3.42 cr shares representing 5.96% stake and in the just released June-ending quarter, its gone back up to 3.86 cr shares representing 6.72% stake. Whats the big deal you would ask? The big deal is that by cutting its stake LIC part protected itself from that ill fated 22% fall Infosys had after Q4 results and by buying after that fall, it managed to participate in the rally that followed, especially the 10% thumbs up stock got after Q1 results. Lets try to put some numbers here.LIC sold 74 lakh shares between December to March. Stock moved between Rs 2700-2900 during that period so lets assume an average price of Rs 2,800 for that period. After Q4 numbers, stock collapsed to Rs 2,300. And with an average price of Rs 2,200-2,400 for the quarter, lets take the average price of Rs 2,300 for the quarter in which LIC bought 44 lakh shares. And now of course, the stock is back to Rs 2,800So just for those 44 lakh shares, LIC managed to sell at highs and buy at lows with a difference of Rs 500/share that translates into Rs 220 cr of trading profit. Keep in mind LIC is a long term shareholder and would have paid no tax on the shares it sold and the shares it acquired last quarter for sure will again be held for long time.
Posted on: Mon, 15 Jul 2013 17:29:36 +0000
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