LIC Share Price Plunges Amid Record Bonus Issue: What's Behind the 50% Crash
LIC Share Price Plunges 50% Amid Bonus Issue Adjustment
On Friday, 29 May, the share price of insurance giant Life Insurance Corporation of India (LIC) plummeted by 50% from its last closing price on the National Stock Exchange (NSE). The stock touched an intraday low of ₹416.25, a significant drop from its last close of ₹830. This drastic decline is a direct result of an adjustment in LIC's stock price in line with its 1:1 bonus issue.
For context, a 1:1 bonus issue means that for every share an investor owns, they receive an additional share for free. This essentially doubles the number of shares, leading to a proportional decrease in the stock price on the ex-bonus date. In this case, the PSU stock has turned ex-record for its 1:1 bonus issue, resulting in the downward adjustment of its stock price.
| Share Price | Last Close | Intraday Low |
|---|---|---|
| ₹830 | ₹830 | ₹416.25 |
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
Investors should note that this decline is not a reflection of an actual loss, but rather a price adjustment due to the bonus shares. The bonus shares are typically credited to eligible shareholders a few days after the record date. Therefore, investors should not be concerned about losing money due to this "fall" in share price.
Investor Takeaway
The decline in LIC's share price is due to an adjustment in line with the 1:1 bonus issue, and investors should not lose money.
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