The ongoing correction in the equity market has weighed heavily on the state-owned life insurer, Life Insurance Corporation of India (LIC), which has seen the total value of its stocks fall by around Rs 84,000 crore in the last one and a half months.
As of the December 2024 quarter, the value of LIC's holdings in listed companies was Rs 14.72 trillion. At current prices (February 18, 2025), the value of these holdings is Rs 13.87 trillion, resulting in a mark-to-market loss of Rs 84,247 crore or 5.7 percent.
The study is based on 330 companies in which LIC has a stake of more than one percentage point (ppt) in the December 2024 quarter. These companies accounted for 66% of the total market capitalization (market cap) of all BSE listed companies.
A large portion of the decline is attributed to the more than 10% correction in ITC (Rs 11,863 crore), Larsen & Toubro (Rs 6,713 crore), and State Bank of India (Rs 5,647 crore) shares so far in CY25. These stocks accounted for 29% of the total LIC value erosion.
LIC's market value has eroded by Rs 1,000 crore across 26 companies. 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 between Rs 2,000 crore and Rs 4,000 crore.
NBFCs: Top Value Destroyers
Among sectors, financials, including banks, non-banking financial companies (NBFCs), and insurance companies, were the top value destroyers, accounting for 22% (Rs 18,385 crore) of total value erosion in LIC's portfolio during the reviewed period.
Other sectors where LIC lost more than Rs 4,000 crore include information technology (Rs 8,981 crore), infrastructure (Rs 8,313 crore), power generation (Rs 7,193 crore), and pharmaceuticals (Rs 4,591 crore).
Other sectors where LIC lost more than Rs 4,000 crore in value during the period included information technology (Rs 8,981 crore), infrastructure (Rs 8,313 crore), power generation (Rs 7,193 crore), and pharmaceuticals (Rs 4,591 crore).
However, Bajaj Finance, Maruti Suzuki India, Kotak Mahindra Bank, Bharti Airtel, Bajaj Finserv, JSW Steel, and SBI Cards have defied the trend, contributing between Rs 1,000 crore and Rs 3,000 crore to LIC's coffers. Reliance Industries (RIL) and Tata Consumer Products invested Rs 840 crore each.
No respite soon
Analysts rule out an early respite in LIC's fortunes, expecting the markets to remain volatile with intermittent bouts of recovery that could be sold into.
HSBC, for example, expects India's valuation multiple to be under pressure until earnings stabilize. They reported that the December 2024 quarter (Q3-FY25) results were lower than expected, despite the fact that expectations had been reduced.
They expect growth to remain tepid for at least two quarters before the lower base or potential policy impact kicks in, and they see downside risk to the consensus's 15% growth forecast for CY25.
"The fall has provided an excellent opportunity for companies with a strong or improving growth narrative. Recent results confirm that software companies' growth prospects are improving, and the sector benefits from the rupee's weakness. A less restrictive monetary policy will benefit lenders who are struggling to raise capital. We also like consumer companies that are benefiting from the recovery in rural demand or expanding into international markets," said Herald van der Linde, HSBC's head of equity strategy for Asia Pacific.
According to Vipul Bhowar, senior director for listed investments at Waterfield Advisors, the allure of US assets has grown in recent months as bond yields have risen, making these investments appear more secure.
"This has caused many FIIs to shift away from Indian and other emerging market stocks. "Investors are increasingly drawn to the promise of safer returns offered by US equities, casting a shadow over many markets, including India," he said.
Emkay Institutional Equities expects the Nifty to reach around 25,000 by December 2025, with FPI selling to subside by Q2-CY25.
