Life Insurance Corporation of India (LIC) share price fell more than 2 per cent to Rs 855.80 on Thursday, taking the total fall to 9.8 per cent in three days since listing. LIC stock was listed at Rs 867 on BSE on Tuesday, against the IPO price of Rs 949 apiece. The Rs 21,000-crore public issue received nearly three times subscription earlier this month in a six-day long subscription window, unlike the usual three-day window. On the listing day of LIC IPO shares, Macquarie initiated coverage of the stock with a neutral rating and pegged a target price of Rs 1,000.
Analysts said that EV (embedded value) is highly susceptible to equity market movements. “A 10% fall in equity markets can erode EV for LIC by 7%, much higher than private-sector peers, where the impact is around 1-2%,” they said. They explained that any investor taking an exposure to LIC stock is indirectly taking an exposure to equity markets and the inherent volatility that comes with it.
In traded volume terms, a total of 2.33 lakh shares exchanged hands on BSE, while 36.54 lakh shares traded on National Stock Exchange (NSE) so far in the day. “Those who are stuck with the allotted shares must hold on to their investments, let the price stablise instead of making a hasty exit,” Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services, told FinancialExpress.com. Vaishnav advised investors sitting on the brink and contemplating entry in the stock to wait. “It would be prudent to allow some time for natural price discovery before entering in the stock,” he added.
LIC stock has witnessed a tepid response post its listing, with the stock currently trading at fresh 52-week low. “Global inflationary concerns coupled with investor sentiments jittery on world economic growth, also appear to have had a negative impact on LIC in the short-term,” Aamar Deo Singh, Head Advisory, Angel One, told FinancialExpress.com. Singh suggested investors holding onto the stock as a long-term investment, given LIC’s leadership position in the insurance business, and the future potential of the business in coming years.
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