Money sinks here in the stock market
The shares of the country’s largest life insurance company LIC are seeing a decline on Thursday. A decision of the government is being told behind this decline. Actually, the government is going to make its stake in LIC shares. Approval has been given to sell shares through Offer for Sale (OFS). About three years ago, its stocks were entered in the domestic market and its IPO was completely offer for sale. Now again the government is going to make its stake in it. After this decision of the government, LIC shares saw a decline, which has increased concern among investors.
Why fall shares?
After this announcement of the government, there was instability in the market. Investors thought that the process of selling government stake on LIC would be accelerated, causing a rapid decline in the price of the company’s shares. There has been a decline of 3% in a month. This year, about 10% has fallen in the top-down so far. The fall in the last six months has reached 28% and 25% in the last one year.
How much is the government’s share in LIC right now?
According to the shareholding pattern of March 2025, the government holds 96.5% stake in LIC. Under its IPO, the government had only lightened 3.5% stake and still a big stake is with the government. Due to this, the free float of LIC shares remains very low. The government had a lightening of 3.5% stake through the IPO and has a 1.13% stake with mutual funds, while more than 23 lakh retail shareholders, or shareholders with investors of up to ₹ 2 lakhs are 1.76%.
What is SEBI rule?
The government also needs to lighten its share because according to the rules of the market regulatory Securities and Exchange Board of India (SEBI), listed company should have at least 25% public shareholding. The government has more holding more than 75% shareholding, with the current value of about ₹ 1.28 lakh crore. This means that according to the current price, the government will get ₹ 6 thousand crore on the sale of every 1% stake. Last year, SEBI approved LIC to get 10% public shareholding by 2027.