LIC Shares Tumble After Government Announces Major Stake Sale Through OFS

Life Insurance Corporation shares came under heavy selling pressure during Tuesday’s trading session after the Central Government unveiled plans to reduce its holding through a large Offer for Sale. The announcement triggered a sharp decline in the stock, making LIC one of the biggest losers in early market trade despite mixed movement in the broader equity indices.

Investors reacted cautiously to the proposed stake sale, pushing the share price down by more than nine percent at the opening bell before it recovered part of the losses later in the session. Market analysts said such volatility is common when a large number of shares are introduced into the market at a discounted price.

The government plans to divest up to 6.5 percent of its stake in LIC through the OFS process. The sale will begin with an initial portion of the shares, while the remaining stake may be offered under the green shoe option depending on investor demand. The issue has been priced at a substantial discount to the previous market closing price to encourage wider participation.

The disinvestment exercise is expected to help the government raise nearly thirty one thousand four hundred crore rupees. More than eight hundred million shares are expected to be offered to investors during the sale process spread across two trading sessions.

While the announcement weighed heavily on LIC shares, the broader market presented a mixed picture. The Sensex traded in positive territory supported by gains in select stocks, whereas the Nifty slipped as weakness in several heavyweight companies limited overall market sentiment.

Market experts believe the initial decline reflects short term selling pressure linked to the OFS rather than changes in LIC’s core business fundamentals. They note that the stock’s future performance will depend on investor response to the offer, overall market conditions and the company’s financial outlook in the coming months.