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LIC share falls for 9th day as anchor investors’ lock-in end nears; tanks 25% from IPO price; buy, sell, hold?

LIC (Life Insurance Corporation of India) share price tumbled for the ninth consecutive day on Friday to a fresh all-time low of Rs 709.20 apiece on BSE

LIC share price
Currently, LIC is the seventh most valued firm in terms of market capitalisation, followed by State Bank of India (SBI) Image: Reuters

LIC (Life Insurance Corporation of India) share price tumbled for the ninth consecutive day on Friday to a fresh all-time low of Rs 709.20 apiece on BSE. The 30-day lock-in period meant for anchor investors in initial public offerings (IPOs) is set to end for companies such LIC, which made their debut share sale last month. This will allow anchor investors to sell their existing shares in the market. The stock price is now 25.22 per cent down from the IPO price of Rs 949 apiece

Analysts say that despite being a fundamentally sound company and having a decent listing price, a higher inflationary environment coupled with bearish economic sentiment has led to the majority of the financials down including the insurance behemoth LIC. “Technically, only a daily close above 746 could trigger an uptrend with next support now at 681. Investors can buy if close above 746 or on a dip near 680,” AR Ramachandran, Co-founder & Trainer, Tips2Trades, told FinancialExpress.com.

The market cap of the insurance company stood at Rs 4.5 lakh crore. However, at the offer price of Rs 949, LIC’s market capitalisation was at Rs 6.02 lakh crore. Technical analysts say that LIC charts suggest both relative overvaluation and weak market sentiment, which have taken a toll on LIC share. “Charts tell that there is a hard attempt by the stock to find a temporary base for itself. Right now, investors should adopt a wait-and-watch policy; if the stock is off from its lows and is looking at ending in the green on any day, they can go ahead and expose a portion of their capital in the stock with a medium term horizon,” Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services, told FinancialExpress.com.

 Currently, the insurer is the seventh most valued firm in terms of market capitalisation, followed by State Bank of India (SBI) with a market capitalisation of Rs 4.16 lakh crore. Ravi Singh, VP & Head of Research, Share India Securities, said LIC share prices may drop further till 650 levels and investors are advised earlier to exit their positions and wait for the turnaround of the sentiments. He told FinancialExpress.com that the high risk appetite investors may hold their positions. It is expected that in the long run, the business metrics of LIC will improve steadily. “Investment done at lower levels will deliver good returns in the long term,” Singh said.

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