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LIC shares hit a new low today M-Cap is nearing Rs 4.5 lakh crore; should you buy, sell, or hold?

LIC Share Price on Friday: Life Insurance Corporation shares fell to a new low on Friday after the regulatory lock-in period on newly issued shares expired. On Friday morning, LIC stocks slid 1.62 percent to Rs 710 a share. The stock of LIC has dropped for the tenth time in a row. During this time, the stock has lost 15% of its value.

The stock has dropped 34% from its initial public offering price. The market capitalization of LIC has dropped to Rs 4.52 lakh crore, down from Rs 6 lakh crore at the time of launching, when the stock was trading at the upper end of the price band of Rs 949 per share.

From the issue price of Rs 949, LIC shares have lost over a quarter of their value. Since May 17, when the stock was first listed, there have been only four sessions in which the stock has closed with a profit, according to data. It has been crumbling under selling pressure for the past few days.

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LIC
LIC

Anchor investors’ lock-in period is slated to expire on June 13, allowing them to sell their current shares in the market.

“An intriguing observation that may be seen is that the low made on the first day of trade following the 30-day anchor investor’s lock-in period may provide as strong support for a subsequent advance in quality equities.” If the fundamentals are robust, buying on such drops is a good idea, according to Santosh Meena, Head of Research at Swastika Investmart Ltd.

The Government of Singapore, SBI Mutual Fund, HDFC Mutual Fund, HDFC Mutual Fund, and Axis Mutual Fund were among the key investors in the IPO.

Domestic mutual funds were the biggest buyers in the public offering, which had a rocky start on the stock exchange. In the anchor issue, 99 plans bought LIC shares worth Rs 4,000 crore.

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What Should a Speculative Investor Do?

Overall, investor sentiment has shifted negative, with some brokerages predicting that the stock will continue to fall as the company struggles to scale up its non-participatory insurance business and contends with persistent market volatility.

“We believe India’s underdeveloped life insurance industry is still in its infancy and is well-positioned to capitalise on the immense growth potential,” Meena added. LIC has a strong brand value, a large network of agents, and an enviable distribution network, to name a few advantages.

LIC
LIC

Furthermore, the company has plans to address issues such as low VNB margins, market share erosion, and a strong reliance on the agency channel, among others. Furthermore, the company’s initial public offering (IPO) was priced at a Price to Embedded Value of 1.1x, which was already lower than its global and Indian counterparts, and the current drop adds to the value comfort. Another point we’d like to stress is that investors should keep in mind that insurance is a long-term business, therefore wealth accumulation and compounding only happen over time.”

“LIC share prices may tumble further until 700 levels,” said Dr. Ravi Singh, vice president and head of research at Share India. “Investors are urged to sell their positions earlier and wait for the turnaround of emotions.” Investors with a high risk appetite may be able to keep their positions. The business indicators of LIC are predicted to improve steadily in the long run. Long-term returns will be good if you invest at a lower level.”

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