LIC Share Price Crashes 8% as Government Opens Rs 31,000 Crore OFS: Floor Price, Dates, Discount and Everything Investors Need to Know
Shares of Life Insurance Corporation of India (LIC) tumbled as much as 8.28% on Tuesday, 4 August, after the government launched a long-awaited Offer for Sale (OFS) to trim its stake in the insurance giant. The stock, which had closed at Rs 428.50 on Monday, opened at Rs 392 and touched an intraday low of Rs 390.50, before easing further to Rs 390.70 on the BSE, a fall of about 8%. Here is exactly what the government announced, the floor price, the timeline for retail investors, and why this has been in the works since LIC’s 2022 listing.
Why LIC Shares Crashed Today
The direct trigger is simple: a large stake sale at a discounted price almost always pressures a stock in the short term, since the market has to absorb a big new supply of shares below the prevailing price. LIC opened at Rs 392, sharply below Monday’s close of Rs 428.50, and fell as low as Rs 390.50 intraday on the NSE. On the BSE, the stock was down about 8% at Rs 390.70, with trading volumes jumping over four-fold as nearly 1 crore equity shares changed hands across the NSE and BSE combined.
OFS Details: Floor Price and Stake Size
The Department of Investment and Public Asset Management (DIPAM) announced the OFS on 4 August. The government is offering a base sale of 2.5% of LIC’s equity, with an option to sell an additional 4% through a greenshoe option, taking the total potential divestment to 6.5%.
The floor price has been fixed at Rs 382 per share, which works out to roughly a 10% discount to Monday’s closing price of Rs 428.50. In a post on X, the DIPAM Secretary said the sale would help LIC achieve minimum public shareholding (MPS) milestones ahead of schedule.
Timeline: Non-Retail Today, Retail Tomorrow
The OFS follows the standard two-day structure used for large PSU stake sales:
Tuesday, 4 August: OFS opens for non-retail investors (institutions and high-net-worth individuals). Wednesday, 5 August: OFS opens for retail investors, who can place their bids.
How Much Will the Government Raise
If the greenshoe option is fully subscribed, the government will sell more than 82.22 crore shares, equivalent to the full 6.5% stake. At the floor price, that sale is expected to generate nearly Rs 31,000 crore for the exchequer, making it one of the largest PSU stake sales of the current financial year.
Why the Government Is Selling: The MPS Deadline
The Centre currently holds around 96.5% of LIC. Under SEBI’s minimum public shareholding (MPS) norms, listed companies must eventually have at least 25% public float, but SEBI had given LIC a relaxed roadmap with a deadline extended to May 2027 to bring the government’s stake down to 90%. This OFS, if the full greenshoe amount is sold, would take the government’s holding from 96.5% down to that 90% target, directly addressing the MPS requirement well ahead of the extended deadline.
LIC Share Price: 52-Week Range
Tuesday’s fall puts LIC firmly in the lower half of its yearly trading band. The stock had hit a 52-week high of Rs 468.30 on 7 November 2025 and a 52-week low of Rs 361 on 2 April 2026. At Tuesday’s intraday low of around Rs 390.50 to Rs 390.70, the stock is trading well below its yearly high and only moderately above its 52-week low, underlining how much sentiment has cooled since last November’s peak.
The Bigger Picture: India’s Disinvestment Programme
LIC’s OFS is part of a much larger push. So far in the current financial year, the government has raised Rs 21,082 crore through stake sales across seven public sector undertakings, combined with proceeds from the Specified Undertaking of the Unit Trust of India (SUUTI). A successful LIC OFS at the current floor price and stake size would add close to Rs 31,000 crore more, making it by far the single largest contributor to this year’s disinvestment tally.
LIC itself made its stock market debut in May 2022 through what was then India’s largest-ever IPO. This OFS marks the government’s most significant reduction in its holding since that listing.
Also Read >>>> Delhi Lakshmi Yojana: Rs 2,500 Monthly, How to Apply Online
Industry Outlook: Why LIC Remains a Long-Term Story
Beyond the near-term price pressure, the structural picture for LIC’s business looks constructive. According to a Swiss Re analysis cited in LIC’s own FY26 annual report (released 6 July 2026), India’s insurance market is forecast to grow at an annual rate of 6.9% between 2026 and 2030 in real terms, making it the fastest-growing major insurance market globally. For life insurance specifically, where India is already the second-largest life insurance market among emerging economies, LIC expects annual growth of 6.8% over the next five years, driven by widening distribution networks, rising demand for retirement products and credit growth.
Reforms by the Insurance Regulatory and Development Authority of India (IRDAI) are also reshaping the industry toward greater transparency, while demographic shifts including rising life expectancy, falling birth rates and wealth concentration among retirees are expected to fuel long-term demand for guaranteed income and care-protection products.
Frequently Asked Questions (FAQs)
Q1. Why did LIC shares crash today?
LIC shares fell as much as 8.28% after the government opened an OFS to sell up to 6.5% of its stake at a floor price of Rs 382, roughly a 10% discount to Monday’s closing price of Rs 428.50.
Q2. What is the floor price of the LIC OFS?
The floor price is Rs 382 per share, fixed by DIPAM for the offer for sale.
Q3. How much stake is the government selling in LIC?
A base 2.5% stake, with an additional 4% through a greenshoe option, taking the total potential sale to 6.5% of LIC’s equity.
Q4. When can retail investors bid in the LIC OFS?
The OFS opened for non-retail investors on Tuesday, 4 August, and opens for retail investors on Wednesday, 5 August.
Q5. How much money will the government raise from the LIC stake sale?
If fully subscribed, the sale of over 82.22 crore shares (6.5% stake) is expected to raise nearly Rs 31,000 crore.
Q6. Why is the government selling its stake in LIC?
To meet SEBI’s minimum public shareholding (MPS) norms, which require the government’s stake to fall to 90% by the extended May 2027 deadline, and as part of the broader disinvestment programme.
Q7. What is LIC’s 52-week high and low?
LIC’s 52-week high is Rs 468.30 (7 November 2025) and its 52-week low is Rs 361 (2 April 2026).
