Why LIC shares fall Today
8+ years of experience in indian stock market
Why LIC Shares Dropped Explained:-
The Trigger:LIC's stock took a nearly 9% hit because the Indian government announced a massive "Offer for Sale" (OFS).
What is the OFS?- An OFS is simply a method for the main owners of a company (in this case, the government) to sell some of their existing shares directly to the public.
The Discount Effect: To attract large institutional investors, the government set the minimum buying price (floor price) at ₹382 per share. Since this was an 11% discount compared to the previous day's market price, the overall stock price naturally dropped on the open market to adjust to this cheaper valuation.
The "Green Shoe" Option: The government committed to selling a base 2.5% stake but included a 4% "green shoe option". This is financial jargon meaning they reserve the right to sell an additional 4% if buyer demand is unexpectedly high, bringing the total potential sale to 6.5%.
The Real Reason for Selling:- The government isn't dumping shares because of bad performance. They are legally required by India's market regulator (SEBI) to gradually reduce their massive 96.5% ownership and increase public shareholding in the company.
Reported from Economic Times — original source.