Mumbai: Life Insurance Corporation of India (LIC) may sell its 15.8 per cent holding in drugmaker Ranbaxy Laboratories Ltd as India's largest domestic institutional investor shuffles its investment portfolio.

While it is still not known whether Ranbaxy or its acquirer Japan's Daiichi Sankyo has approached LIC for the stake, analysts expect LIC to offload the stake in a volatile market.

LIC, which hopes to invest around Rs45,000 crore in the stock markets this year, said it may shift a few thousand crores to the debt market if the market remains volatile.

Daiichi Sankyo, Japan's No 3 drugmaker, had struck a deal this month with Ranbaxy's founding Singh family to buy its 34.8 per cent stake. Together with the mandatory open offer to acquire a further 20 per cent from other shareholders, the deal is worth up to $4.6 billion.

LIC's 15.8 per cent stake would take Daiichi's holding in Ranbaxy to a majority 50.6 per cent.

Daiichi's open offer price of Rs737 per share is also attractive considering the stock is currently trading at Rs566.65 a share.

The settlement of an ongoing litigation with Pfizer should come as an added attraction for the Ranbaxy scrip.

Daiichi's open offer starts on August 8 and closes on August 27.

LIC had an investible corpus of around Rs1,50,000 crore last year and it is expected to exceed Rs1,75,000 crore this year.