At the same time, LIC acquired shares worth about Rs 3,877 crore (about $ 714 million) in energy, metal and mining and software companies, the global research report by BofA-Merrill Lynch said.
LIC sold shares of private lenders --Axis Bank, HDFC Bank and ICICI Bank--drug major Sun Pharma and auto firm Mahindra & Mahindra, while bought shares of energy companies-- Reliance Power, Cairn India and Reliance Industries-- IT giant Infosys, and FMCG firm ITC, the report said.
"State-run LIC lowered its exposure to companies like Axis Bank (with sale of shares for an estimated $ 891 million), Mahindra & Mahindra ($177 million), HDFC Bank ($ 157 million), Sun Pharma ($154 million) and ICICI Bank ($145 million)," the report said.
On the other hand, LIC's major investment during the quarter included Reliance Power ($203 million), Infosys ($162 million), Cairn India ($150 million), Reliance Industries ($142 million) and ITC ($94 million).
The report said that LIC has emerged as net sellers during October-December quarter and most of the pullout was from private sector companies.
Also, LIC was net seller during the July-September quarter 2012 with the insurer purchasing shares worth an estimated $ 1.3 billion (Rs 7,020 crore) in India equities and selling shares to the tune of $ 436 million (Rs 2,355 crore).
In terms of sectors, LIC sold shares valued at $ 1.45 billion in the finance portfolio during the three months ended December 31, 2012 followed by auto ($ 368 million), pharma ($ 325 million), industrial ($ 82 million), cement ($ 81 million) and chemicals ($ 7 million), the report said.
In contrast, the insurance giant's investment in the utilities sector stood at $ 300 million, followed by $ 197 million in the energy category, $ 142 million in metals and mining space, $ 54 million in software and $ 21 million in the telecom area.
Financial sector accounted for 24 per cent of LICs total equity portfolio in the country followed by energy at 16 per cent, consumer goods 13 per cent and software 8 per cent.
According to an estimate, LIC has lowered its holdings in as many as 27 of the 50 blue-chip firms forming the market benchmark index Nifty, selling shares worth an estimated Rs 8,000 crore for the three-month period ended December 31, 2012.