Life Insurance Corporation of India (LIC), the nation's largest insurer, has asked the sector regulator to allow a single fund from its portfolio to hold more than 10% of a company, so that it can buy more equity in a falling market.

"We have reached the 10% ceiling and so we keep churning the portfolio, depending upon the market conditions. We have written to the regulator to increase the headroom," said DK Mehrotra, the acting chairman of LIC.

Guidelines put in place by the Insurance Regulatory and Development Authority (Irda) stipulate insurance companies can invest up to 10% in a single company. For infrastructure companies, the limit is 15%.

But LIC has more flexibility than private insurance companies because the 10% limit is applied to different funds of the state-run insurer, recognising the fact that its stake in many companies has historically exceeded the limit set by the regulator, which was set up in 2000. Each fund is linked to different types of insurance products.

 LIC, like other insurance companies, broadly offers three types of insurance products. They are unit-linked investment plan (Ulip), an insurance product in which investment is the primary objective, the so-called pure life policies in which the intent is to insure against death and group insurance policies. Once the investment from a single category crosses 10%, it needs permission from the government and the regulator to buy more.

LIC's stake exceeds 10% in a number of blue-chip companies, including L&T, ITC, SBI, Tata Steel, M&M and ACC.

The corporation is using the downturn in the market as an opportunity to increase its equity holdings. It has an investible corpus of over Rs 2 lakh crore, of which it plans to invest Rs 60,000 crore in equities, depending upon the market conditions.

The corporation takes a contrarian approach by buying equity when the market is down. "LIC finds opportunities on both sides of the spectrum. When the market goes down, people worry but we find opportunities to buy at a decent price," said Mehrotra.

LIC is also looking to invest in government-floated plan like infrastructure debt fund and take-out financing scheme to meet its mandatory infrastructure investment limit of 15%, said Mehrotra.