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LIC Shares Hit All-Time Low, Investors Lose Rs 1.4 Lakh Crore Since Listing; What Next?


LIC Shares: LIC slides to a new all-time low for the ninth straight day on Thursday, hitting a fresh low of Rs 731.10 apiece on BSE. With today’s drop, the market cap of the insurance company stood at Rs 4.61 lakh crore. The scrip dropped another 2 per cent on Thursday, slipping to Rs 723.7, before making a partial recovery. Shares of LIC have wiped off almost one-fourth of their wealth from the issue price of Rs 949. The journey of LIC on Dalal Street has been a painful one for investors so far as the stock has wiped out more than Rs 1.4 lakh crore of wealth.

BSE Sensex and NSE Nifty 50 were ruling weak on the day of the weekly F&O expiry. So far in the session, BSE Sensex hit a day’s low of 54,507.41, while NSE Nifty 50 touched 16,243.85.

Santosh Meena, Head of Research, Swastika Investmart, said India’s highly underserved life insurance market is still in its infancy and is well-positioned to capitalize on the enormous growth potential.

“LIC has a number of competitive advantages, including a strong brand value, a massive network of agents, and an enviable distribution network,” he added. “Investors with a long-term view can buy this stock at the current market price and follow buy on dip strategy.”

Shares of LIC got listed on May 17, and since then there have been just four sessions when the stock has closed with a gain, data shows. For the rest of the days, it has crumbled under selling pressure.

LIC shares continue to witness selling on the back of inflationary concerns and liquidity tightening fears, said Aamar Deo Singh, Head Advisory, Angel One. Singh suggested investors holding the stock from a long-term perspective, ideally should not be swayed by the daily price movements. He said that technically, for the stock to witness a change in the trend, the stock must trade above the 840 mark consistently.

Manoj Dalmia, founder and director, Proficient equities Private limited said, “LIC’s share price extended its correction mode and made a new low of Rs751.50 on NSE. After having a gap down opening, LIC’s share price made its intraday closing of Rs 753.0 breaching its previous low made yesterday. After making this new low, LIC share price today quoted around 21 per cent below its issue price of Rs 949 per equity share.”

He said the probable reasons could be that the stock has failed to attract the interest of FIIs, Q4 results also were not that encouraging, and no comparable valuation is available thus making valuation abstract among investors.

Dalmia added that “the outlook for the stock will be bearish considering the anchor investor of lockin ending by mid of this month and the price pattern also conveying the same. The downside levels are Rs 741 and Rs 713 , investors are advised to avoid heavy buying in the stock and avoid averaging unless a reversal in prices is seen.”

Ravi Singhal, Vice Chairman, GCL Securities Limited said, “As we can see after listing, the stock is steadily declining. The following factors are to blame: The results did not meet expectations, and the listing was below the issue price, trapping many investors, particularly new investors. As market trends deteriorate, so do investment valuations. And the vertical of direct sales is good, but the market is waiting to see if it will move to an online platform, or if it will continue to lose market share. Technically, it appears to be weak as well. It is currently oversold. So, sell on a rise near Rs 777, stop loss of Rs 822, and Target of Rs 677. Long-term investors can keep it, but it will not outperform the Nifty until it enters the online business.”

The views and investment tips by experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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