Invested in Loss-Making LIC? Experts Answer What You Should Do Next

Despite the buzz LIC's IPO created in the stock market, its shares have not performed as well as expected.

Image used for representational purposes only. 

(Photo: The Quint)

The Initial Public Offering (IPO) of Life Insurance Corporation (LIC) had created a lot of buzz among investors. However, after it was listed, LIC's stock price fell from Rs 902-949 per share in 20 days to Rs 755 on 7 June.

Around Rs 1.08 lakh crore of shareholders' money was lost in the process. In such a situation, a pertinent question that arises is, "What should shareholders do?" "Would it be good to withdraw one's money?"

At the time of listing, the market cap of the country's largest insurance company was estimated to be around Rs 6 lakh crore. However, the market cap has come down to around Rs 4.91 lakh crore in the current period.

What Should LIC Investors Do?

Market expert Rajeev Talreja told The Quint that the fundamentals of the company were good, that is, the company would be able to increase its income further in the future.

"If you have faith in the company, then definitely hold on as it would be beneficial in the future. Those who want to make wealth in the stock market have to be patient for a long time."

On the other hand, Biz2Credit CEO Rohit Arora said, "If you are thinking for the long-term, then holding on will be a profitable deal. In the short-term, I think the share price will fall further."

'Hold On to Stocks as Market Will Improve in the Long Run': Experts

Speaking to The Quint, Bank Bazaar CEO Adil Shetty said that since stock markets around the world were suffering, it would take time for markets in India to adjust to the current situation.

"Therefore, people should give some time to the market. Good times will come. For now, keep your money where it is invested. Wait for the market to stabilise," he said.

Meanwhile, Tips to Trades CEO Pavitra Shetty said that unless LIC's stock closes above Rs 824, there was no room for improvement, as per The Financial Express.

On the other hand, Share India Security vice-president Ravi Singh said that in the coming days, the share price could even touch Rs 750.

The reason behind this was attributed to rising inflation and hypersensitivity of the insurance sector.

Market expert Milan Vaishnav said that LIC's stock was swinging between demand and supply in the market. Hence, the only way to take a decision regarding withdrawing or not would be to give the market time, he said.

Meanwhile, Chief Investment Officer (CIO) of Kotak Mahindra Anshul Saigal said that whenever one thinks about investing, one should think of the fundamentals of the company as well as the long-term perspective.

"If you can manage the short-term risk in the market, then hold your shares since in the long-term the market will improve," he was quoted as saying by The Economic Times.

Indian Rupee Losing Strength Against the Dollar

Many experts believe that the stock market will be under pressure for a long time. On the one hand, foreign investors are withdrawing their money, while on the other the Indian rupee is losing its strength against the United States dollar (USD).

Inflation has also put pressure on the working capital of several companies, including manufacturing companies. Because of this, profits will be affected, which will be indicated by falling share prices.

Experts also believe that these problems will impact the market for the next two quarters, that is, six months.

One factor to consider, however, is that LIC is still outperforming ICICI Prudential, HDFC Life, and SBI Bank. Rating agency CareEdge also expects LIC to grow at the rate of 12-14 percent over the next three to five years.

(With inputs from The Financial Express and The Economic Times.)