LIC suffers Rs 84,000 crore dent in portfolio amid stock market crash

The ongoing correction in the equity market has weighed heavily on state-owned life insurer, Life Insurance Corporation of India (LIC), which has seen the total value of stocks held by it dip around Rs 84,000 crore in the past one-and-half months.

As of the December 2024 quarter, the value of LIC's holdings in listed companies stood at Rs 14.72 trillion. At current prices (February 18, 2025), the value of these holdings stands at Rs 13.87 trillion, translating into a mark-to-market hit of Rs 84,247 crore or 5.7 per cent.

The study is based on 330 companies where LIC holds over 1 percentage point (ppt) stake in the December 2024 quarter. These companies accounted for 66 per cent of total market capitalisation (market-cap) of all BSE listed companies.

A large portion of the fall is attributed to the over 10 per cent correction in ITC (Rs 11,863 crore), Larsen & Toubro (Rs 6,713 crore) and State Bank of India (Rs 5,647 crore) shares, thus far in CY25. These stocks have accounted for 29 per cent of the total LIC’s value erosion.

In total 26 companies, LIC have seen market value erosion of Rs 1,000 crore. The insurer’s market value in Tata Consultancy Services (TCS), Jio Financial Services, HCL Technologies, JSW Energy, Adani Ports and Special Economic Zone, HDFC Bank and IDBI Bank has declined in the range of Rs 2,000 crore to Rs 4,000 crore.

NBFCs: Top value destroyers

Among sectors, financials including banks, non-banking financial companies (NBFCs) and insurance companies, the top value destroyers, accounted for 22 per cent (Rs 18,385 crore) of total value erosion in LIC’s portfolio during the period under review.

Information technology (Rs 8,981 crore), infrastructure (Rs 8,313 crore), power generation (Rs 7,193 crore) and pharmaceuticals (Rs 4,591 crore) are other sectors, in which LIC lost over Rs 4,000 crore in value during the period.

However, Bajaj Finance, Maruti Suzuki India, Kotak Mahindra Bank, Bharti Airtel, Bajaj Finserv, JSW Steel and SBI Cards have buck the trend, by adding between Rs 1,000 crore to Rs 3,000 crore in LIC’s coffers. Reliance Industries (RIL) and Tata Consumer Products added Rs 840 crore each.

No respite soon

Analysts rule out an early respite in LIC’s fortunes as they expect the markets to remain volatile amid intermittent bouts of recovery, which could get sold into.

Those at HSBC, for instance, expect India's valuation multiple to remain under pressure until earnings stabilize. The December 2024 quarter (Q3-FY25) results, they said, were below estimates, even amid the backdrop of lowered expectations.

They expect growth to remain tepid for at least two quarters before the lower base or potential policy impact kicks in and see downside risk to consensus’s 15 per cent growth expectations in CY25.

“The fall has created a good opportunity for companies with a strong or improving growth narrative. Recent results affirm improving growth prospects for software companies and the sector also benefits from the weak rupee. A less restrictive monetary policy will be good for lenders struggling for capital. We also like consumer companies that benefit from the recovery in rural demand or are tapping into the overseas market,” said Herald van der Linde, head of equity strategy for Asia Pacific at HSBC.

The allure of US assets has intensified in the last few months, said Vipul Bhowar, senior director for listed investments at Waterfield Advisors, driven by rising bond yields that have made these investments seem more secure.

“This has led many FIIs to pivot away from Indian and other emerging market stocks. Investors are increasingly drawn to the promise of safer returns offered by US equities, leaving many markets, including India, in their shadow,” he said.

Emkay Institutional Equities expects Nifty to be at around 25,000 levels by December 2025, and FPI selling to subside by Q2-CY25.