LIC's Portfolio Shrinks by ₹84,000 Crore Amid Stock Market Turmoil

The ongoing downturn in the equity market has significantly impacted Life Insurance Corporation of India (LIC), a state-owned insurer, with the total value of its stock holdings dropping by approximately ₹84,000 crore over the past one-and-a-half months.

As of the December 2024 quarter, LIC's investments in listed companies were valued at ₹14.72 trillion. However, as of February 18, 2025, this has declined to ₹13.87 trillion, marking a mark-to-market loss of ₹84,247 crore or 5.7%.

As of 10:30 AM IST, LIC share price was at ₹768.90, up 0.64% from its previous close.

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The analysis considers 330 companies where LIC held over a 1% stake during the December 2024 quarter. These firms collectively represented 66% of the total market capitalization of all BSE-listed entities.

A substantial portion of the decline stems from over a 10% correction in the share prices of ITC (₹11,863 crore), Larsen & Toubro (₹6,713 crore), and State Bank of India (₹5,647 crore) in CY25. These three stocks alone contributed to 29% of LIC’s total value erosion.

LIC has experienced a market value decline of over ₹1,000 crore in 26 companies. In particular, the insurer’s holdings in Tata Consultancy Services (TCS), Jio Financial Services, HCL Technologies, JSW Energy, Adani Ports & SEZ, HDFC Bank, and IDBI Bank have each depreciated between ₹2,000 crore and ₹4,000 crore.

NBFCs: Leading Contributors to Value Erosion

Among various sectors, financials—including banks, non-banking financial companies (NBFCs), and insurance firms—were the biggest detractors, accounting for ₹18,385 crore (22%) of LIC’s total losses during this period.

Other significant losses occurred in the IT sector (₹8,981 crore), infrastructure (₹8,313 crore), power generation (₹7,193 crore), and pharmaceuticals (₹4,591 crore), each recording declines exceeding ₹4,000 crore.

However, some stocks managed to defy the downtrend. Bajaj Finance, Maruti Suzuki India, Kotak Mahindra Bank, Bharti Airtel, Bajaj Finserv, JSW Steel, and SBI Cards each contributed gains ranging between ₹1,000 crore and ₹3,000 crore to LIC’s portfolio. Additionally, Reliance Industries (RIL) and Tata Consumer Products added ₹840 crore each.

Outlook Remains Uncertain

Analysts anticipate continued volatility in LIC’s holdings, with short-term recoveries likely to be met with renewed selling pressure.

HSBC analysts believe India’s valuation multiples will remain under stress until corporate earnings stabilize. They noted that Q3-FY25 (December 2024 quarter) earnings underperformed even against already lowered expectations. Growth is expected to stay muted for at least two more quarters before any potential policy-driven recovery takes effect. Furthermore, they see a downside risk to the consensus forecast of 15% earnings growth for CY25.

“The recent decline presents an opportunity for companies with strong or improving growth narratives. Earnings trends indicate positive prospects for software firms, which also stand to benefit from a weaker rupee. Additionally, a less restrictive monetary policy could aid lenders facing capital constraints. We also favor consumer companies benefiting from a rural demand recovery or expanding into international markets,” said Herald van der Linde, HSBC’s Head of Equity Strategy for Asia-Pacific.

Meanwhile, the appeal of U.S. assets has grown in recent months, according to Vipul Bhowar, Senior Director for Listed Investments at Waterfield Advisors. This shift is largely driven by rising bond yields, making U.S. investments appear more secure.

“As a result, many foreign institutional investors (FIIs) have diverted funds away from Indian and other emerging market equities, favoring the perceived stability of U.S. stocks,” he noted.

Emkay Institutional Equities projects the Nifty index to reach approximately 25,000 by December 2025, with foreign portfolio investor (FPI) selling expected to taper off by Q2-CY25.