Why is the LIC crashing?


Editorial team Published on

📉 LIC Share Price Movements

Life Insurance Corporation of India (LIC) shares often appear to crash due to major corporate actions like bonus adjustments or government share sales rather than a drop in the underlying business.

💡 Why LIC Appears to Crash

  • 📊 Bonus Adjustments: LIC stock adjustments for bonus issues (like a 1:1 ratio) can make the share price instantly halve on paper while the actual value remains stable.
  • ⚠️ Offer for Sale (OFS): Government stake sales (such as the massive multi-billion rupee LIC OFS launch) increase short-term market supply and trigger immediate double-digit price dips.
  • 🔎 Regulatory Shareholding: Large share sales are typically conducted at a steep floor-price discount to meet SEBI public float requirements, dragging down near-term market prices.
  • 📉 Portfolio Volatility: As a massive institutional investor, broader stock market bloodbaths (like major corrections in IT or public sector holdings) dent its overall portfolio value.