LIC shares hit new low on Monday; could go further south, say experts

LIC stocks hit a new low of ₹786.10 in the opening trade on Monday (June 6), dropping its market value to below ₹5 lakh crore to around ₹4.97 lakh crore, since its inception in the stock markets.

LIC share price is 17 per cent lower than the upper price band of ₹949 per equity share during IPO, wherein its market capitalisation stood at ₹6,00,242 crore. The IPO was over-subscribed 2.95 times.

However, it has fallen since its debut on NSE on May 17, losing ₹46,500 crore after listing.

What experts say

Experts are of the opinion that the prices may go down further as the 30-day lock-in of anchor investors will be ending in middle of this month.

Saurabh Jain, Vice President — Research at SMC Global Securities said, “LIC IPO had a weak listing as FIIs’ participation in the stock was almost nil. Apart form this, there is an overhang of one month lock-in for anchor investors. Once anchor investors’ one month lock-in ends, there can be more selling expected in LIC shares. So, my advice to positional investors in regard to LIC share is to avoid as its Q4 earnings are also not encouraging.”

“LIC share price is looking on a chart pattern and my advice to fresh investors is to avoid taking any position in LIC shares at current levels,” said Sumeet Bagadia, executive director at Choice Broking.

Also read: LIC Q4 profit drops 17% at Rs 2,409 cr; declares Rs 1.50 dividend per share

“LIC share price may go up to ₹750 levels and those who have long-term view can hold the scrip and keep on averaging on every 5-6 per cent dip. But, averaging should begin when it is around ₹750 levels,” he added.

“LIC may witness some more selling pressure and can touch the levels of ₹750–700 in coming trading sessions,” Ravi Singh, VP & Head of Research, Share India Securities, told Financial Express.

According to stock analysts, investors are not quite optimistic about the embedded value of the insurance behemoth, which is to be declared by June 31.

Apart from that, the insurance business’s susceptibility to be affected by volatile equity markets and weak economic growth forecasts have dampened investor sentiment.

The weak quarterly results for the March 2022 only worsened its image among investors although it had improved year-on-year profits, registering ₹4,000 crore in 2022 against ₹ 2,900 crore in 2021.