LIC shares fell below at Rs 700, may take a further ‘setback’

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LIC shares have already fallen by more than 25% from its issue price. On Monday, LIC’s shares have fallen by more than 4 percent on the Bombay Stock Exchange to a level of Rs 677.45.

LIC shares may see more pressure this week. This is because the 30-day lock-in period for anchor investors ends on Monday. LIC shares have already fallen by more than 25% from its issue price. On Monday, LIC’s shares have fallen by more than 4 per cent to Rs 677.45 on the Bombay Stock Exchange (BSE). The issue price of LIC shares was Rs 949.

LIC shares Fall

Anchor investors had bought about 5.93 crore shares of the insurance company a day before the opening of LIC’s IPO. Anchor investors can sell LIC shares in the open market from Monday, June 13, 2022. LIC shares have declined in the last 9 sessions. The shares of the insurance company fell from Rs 837 to close at Rs 709.70 on Friday, June 10, 2022. Analysts believe that there may be further correction in LIC shares. According to market expert, Shares of Life Insurance Corporation of India (LIC) have lost over 11 per cent in the last five trading sessions. On 7 June 2022, the shares of LIC were at the level of Rs 762.70 on the Bombay Stock Exchange. On June 13, 2022, the company’s shares are trading at a level of Rs 677.45 on BSE. At the same time, LIC’s shares have fallen 22.56 percent in the last one month. LIC shares were at Rs 875.45 on BSE on 17 May 2022, as against Rs 677.45 on 13 June 2022.

Rajat Sharma, Founder and CEO, Sana Securities does not expect any significant jump up. He foresees the stock going down another 10 per cent and the bounce back. “Maybe it bounces back 5-10 per cent from here, but that is not really a reason why you buy a stock. You buy a stock because you feel for the next many years there will be growth, the stock would double and triple and quadruple. I do not see that happening. It is a completely matured business, there is nothing in LIC, no reason to buy i.

What should investors do? 

Santosh Meena, Head of Research, Swastika Investmart Ltd. had said that traditionally the low made on the first day of trade after the 30-day anchor investor’s lock-in period may act as strong support for a further rally for quality stocks.  

We believe India’s highly underserved life insurance market is still in its infancy and is well-positioned to capitalize on the enormous growth potential, the expert said on Friday.  

“If fundamentals are strong, it is a good time to buy on such dips,” Meena suggested.  

Global brokerage firm Emkay had also initiated coverage on LIC with a ‘hold’ rating for a target price of Rs 875 per share. On today’s low price of Rs 681, it is still an upside of nearly 28% for a period of 12 months.  

“While we appreciate LIC’s market-leading position and comfortable valuations, we prefer private sector peers that have better growth, profitability and therefore higher RoEV prospects,” the brokerage had said in its note. 

LIC share tepid listing 

Earlier, LIC shares made a tepid debut on the exchanges (NSE, BSE) on May 17, and have been declining since then.  

Shares of Life Insurance Corporation of India were listed at Rs 867.20 on the BSE, a discount of 8.6 per cent discount against issue price of Rs 949 per share. On the National Stock Exchange (NSE), the stock debuted at Rs 872, er by 8 per cent against its issue price.  

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