The Life Insurance Corporation of India (LIC) has faced significant challenges recently, marked by a dramatic decline in its equity portfolio. This downturn has resulted in substantial losses, raising concerns about the future of its investment strategy.
Recent Losses in LIC’s Equity Portfolio
LIC has reported losses amounting to approximately Rs 1.45 lakh crore over a two-month period in 2025. The value of its investments has decreased from Rs 14.9 lakh crore in December 2024 to Rs 13.4 lakh crore by the end of February. This represents one of the most significant mark-to-market losses in its recent history.
The downturn is closely linked to a broader market crash that has severely affected small and mid-cap shares, which have seen their most substantial decline since the COVID-19 pandemic. The impact of this market crash is evident across LIC’s extensive portfolio, which includes over 310 stocks.
Impact on Major Holdings
Large-cap shares, where LIC has made considerable investments, have also suffered significant losses. Among the most affected is ITC, LIC’s second-largest equity investment, which has experienced an 18% decrease, resulting in a loss of around Rs 17,000 crore in value. Other major holdings, such as TCS and Infosys, have also contributed to the decline, with ownership stakes of 4.75% and 10.58% respectively, leading to losses of Rs 10,509 crore and Rs 7,640 crore.
The banking sector has not been immune to the turmoil, with LIC’s substantial stakes in State Bank of India (SBI) and ICICI Bank facing considerable declines. The value of LIC’s investment in SBI, where it holds a 9.13% stake, has decreased by Rs 8,568 crore, while its 7.14% stake in ICICI Bank has seen a reduction of Rs 3,179 crore.
Resilience Amidst the Downturn
Despite the overall downturn, some of LIC’s investments have shown resilience. Companies such as Bajaj Finance, Kotak Mahindra Bank, Maruti Suzuki, Bajaj Finserv, and SBI Cards have performed positively, offering a glimmer of hope amid widespread losses. However, ongoing market instability and persistent selling pressure raise concerns about the potential for further declines in LIC’s investments.
Analysts have noted that the Nifty index’s 16% drop from peak levels has brought its TMM PE multiple below 20 for the first time in over two years, suggesting that valuations may be becoming more reasonable. The future of LIC’s investment strategy is under scrutiny as the market continues to face volatility.
Market Outlook and Challenges
The recent trend of foreign institutional investors selling Indian equities, totaling over Rs 3 lakh crore in the cash segment, has worsened the situation. Market analysts have differing views on the outlook, with some predicting range-bound movement for the Nifty index this year, while others anticipate a recovery to 26,000 by December 2025, indicating a potential gain of 13%.
Some believe that India will outperform other emerging markets, supported by economic stability and rising consumption. However, the ongoing challenges in the small and mid-cap sectors, along with sustained selling pressure from foreign institutional investors, suggest that LIC may endure a prolonged period of difficulty.
Conclusion
LIC has already reported losses exceeding Rs 1,000 crore in at least 35 stock positions this year, underscoring the widespread impact of the market downturn on its portfolio. As the situation develops, LIC’s ability to navigate these turbulent conditions will be crucial in maintaining policyholder returns and ensuring the long-term viability of its investment strategy.
In summary, the current market conditions pose a significant challenge for LIC as it deals with substantial losses across its diverse portfolio. The interplay of market sentiment, institutional selling, and sector-specific declines will be critical in shaping the future of LIC’s investments and its overall performance in the financial landscape.
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