LIC Shares Crash 8% as Government Offer for Sale Kicks Off

Life Insurance Corporation of India shares nosedived 8.28% on the National Stock Exchange as the Indian government's massive Offer for Sale (OFS) opened for institutional and non-retail subscription. The state-run insurance behemoth opened sharply lower at ₹392 compared to its previous close of ₹428.50, hitting an intraday low of ₹390.50.

The Centre has set the floor price for the OFS at ₹382 per share to divest a 2.5% equity stake, which includes a green shoe option to offload an additional 4%. If fully subscribed, this multi-billion dollar secondary share sale will push the total dilution to 6.5%, translating to more than 82.22 crore shares being offloaded to meet regulatory requirements.

This strategic disinvestment is designed to help the state-run insurer comply with SEBI's minimum public shareholding norms by reducing the government's commanding 96.5% stake down to 90%. While the discounted floor price triggered an immediate knee-jerk sell-off as the market adjusted to the heavy equity supply, the share sale is expected to fetch roughly ₹31,000 crore for the exchequer.

With non-retail bids already underway, retail investors get their window to participate on Wednesday, facing a steep discount relative to recent trading ranges. Market participants are closely tracking overall subscription velocity and institutional demand to gauge whether the massive share overhang will keep a lid on near-term price recoveries.