Shares of Life Insurance Corporation of India Ltd slipped 3.19 per cent to hit their 52-week low level of Rs 566 in Monday’s trade against a previous close of Rs 584.65. The stock extended its fall for the seventh consecutive session. The stock has fallen sharply since its tepid market debut in the mid of last year. The recent correction in LIC’s stock comes amid a continuous drop in Adani Group shares.
The weakness in Adani stocks and deep erosion in market capitalisation (m-cap) got reflected on the LIC counter as well. In an interaction with Business Today TV, Sunil Damania, Chief Investment Officer, MarketsMojo said, “The value of LIC has fallen due to fluctuation in the price of Adani stocks.”
On a year-to-date (YTD) basis, the scrip has declined 19.96 per cent.
As of December 2022, LIC held 9.14 per cent in Adani Ports; 5.96 per cent in Adani Total Gas; 4.23 per cent in Adani Enterprises; 3.65 per cent in Adani Transmission; and 1.28 per cent in Adani Green Energy.
“LIC’s exposure in the Adani group is 0.975 per cent of LIC’s total AUM (Asset under management) at book value,” the insurer said.
Since January 24 this year, Adani stocks took a major hit after US-based short seller Hindenburg Research alleged that the Gautam Adani-led Indian conglomerate had engaged in stock manipulation and accounting fraud scheme over the last few decades. Adani Group, however, refuted the claim as baseless. Following a brief halt, the Adani stock rout resumed last week.
Yet, Kotak Institutional Equities has assigned a ‘Buy’ call while pegging the life insurer’s stock at Rs 975 over the next 12 months.
LIC has an average target price of Rs 850.67, Trendlyne data showed, suggesting a potential upside of 49.70 per cent.
On the technical front, Rajesh Bhosale, Technical Analyst at Angel One, said, “The stock remains an underperformer and has broken below its recent swing low support in the zone of Rs 580-600. Going ahead, this support will now act as resistance on the bounce, whereas, Rs 550-543 is the next support for this counter.”
Ganesh Dongre, Senior Manager – Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, “At the current juncture, the LIC stock still has a bearish structure in nature. So, traders should avoid this stock at the current levels for taking a long position. Investors can wait further for some more weeks to stock get into the consolidation zone.”
AR Ramachandran from Tips2trades said the LIC stock price continued its downward spiral and a daily close below Rs 580 could trigger a fall to Rs 545 this week. “Strong resistance will be at Rs 595 on the daily charts,” he added.
The stock was last seen trading lower than the 5-day, 20-, 50-, 100- and 200-day moving averages. The counter’s 14-day relative strength index (RSI) came at 21.04. A level below 30 is defined as oversold while a value above 70 is considered overbought.
In a separate development, LIC has recently reduced its stake in Industrial Investment Trust Ltd from 5.433 per cent to 3.362 per cent.
Meanwhile, Indian equity benchmarks fell sharply in late deals today, dragged by metal, technology and automobile stocks.
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