After falling for 10 consecutive sessions, Life Insurance Corp Of India on Tuesday rose around 2% on the back of higher volumes.
The stock hit a high of Rs 682 on BSE. At 9.30 am, the scrip was trading at Rs 678 on BSE, up 1.5% from its previous close. Since listing, LIC has declined 28% from its issue price of Rs 949 a share.
According to stock market experts, one can accumulate LIC shares at current levels as the stock is available at attractive valuations but the time horizon for accumulation has to be long-term.
Wealth Destroyer
LIC’s shares are poised to fall for a 10th consecutive session, slipping as much as 5.6% Monday after a mandatory lock-up period for anchor investors ended Friday.
The rout has worried India’s government, with officials saying the company’s management will “look into all these aspects and will raise shareholders’ value.”
An eye-popping $17-billion wipeout in market value has made Life Insurance Corp of India one of the biggest wealth destroyers among Asia’s initial public offerings this year.
Having plunged 29% since its May 17 debut, India’s biggest-ever IPO now ranks second in terms of market capitalization loss since listing, according to data compiled by Bloomberg.
The drop puts it just behind South Korea’s LG Energy Solution Ltd., which saw a more than 30% peak-to-trough decline in its share price after an initial spike on debut.
Analyst Word
More pain could be ahead for the stock given its lackluster quarterly results, according to Avinash Gorakshakar, head of research with discount brokerage Profitmart Securities Pvt.
“The management’s communication with investors is confusing. They haven’t held an analyst call after the results,” he said. “So there is no clarity on how the company is planning to grow, what is going to be its strategy.”
Manoj Dalmia Founder and Director-Proficient Equities Limited said: “LIC made slight gains, this must be due to some buying happening but don’t consider this as a trend reversal and buy immediately and wait for some consolidation to take place.
Those who have to hold for a longer period may remain to hold as it won’t make sense selling now and booking loss, one thing can be done is average more on a consolidation.”
Ravi Singh, vice president and head of research, Share India, said: “LIC share prices may drop further till 700 levels, and investors are advised earlier to exit their positions and wait for the turnaround of the sentiments.
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.”
