LIC Loses ₹11,500 Crore as ITC Shares Slide 14% in Two Days — Here’s What Triggered the Fall
The sharp decline in ITC shares over the last two trading sessions has resulted in significant mark-to-market losses for state-run insurers, with Life Insurance Corporation of India (LIC) alone losing around ₹11,500 crore in portfolio value.
Overall, the two-day selloff erased nearly ₹13,740 crore from the combined holdings of three government-owned insurers, underlining the heavy institutional exposure to the FMCG major.
What caused the sharp fall in ITC shares?
1. Weak near-term earnings outlook
Investor sentiment turned cautious amid concerns over slower volume growth and margin pressures in ITC’s core FMCG and cigarette businesses. Softer demand trends and rising input costs have weighed on near-term earnings expectations.
2. Valuation concerns after long rally
ITC had delivered strong returns over the past two years, prompting profit booking as valuations appeared stretched compared to peers. Analysts believe the stock was vulnerable to correction after outperforming the broader market.
3. Sector-wide pressure on FMCG stocks
The broader FMCG sector has been under pressure due to margin concerns and selective demand slowdown. This has amplified selling pressure in heavyweight stocks like ITC.
Impact on LIC and other insurers
LIC, which holds a sizeable stake in ITC, bore the brunt of the correction. The stock’s fall translated into double-digit percentage losses in just two days, significantly impacting insurers’ equity portfolios. Other state-run insurers also saw notable erosion in value due to similar exposure.
What should investors do now?
Despite the short-term volatility, several market experts continue to view ITC as a long-term compounder, citing its strong cash flows, diversified business model, and improving FMCG execution. However, near-term performance may remain subdued until earnings visibility improves.
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