LIC's ₹11,400 Crore Hit
The government raised excise duty and GST, causing ITC's stock to fall sharply. LIC's large stake in ITC led to this big portfolio hit.
MARKET NEWS
Harsh Garg
1/2/20261 min read
Due to a dramatic drop in its holdings in ITC shares, LIC suffered a major blow, losing nearly ₹11,400 crore in value over the course of two days. The loss is a result of recent government increases in the GST and excise tax on cigarettes, which had a significant effect on the price of ITC's shares. This incident demonstrates how susceptible LIC's portfolio is to changes in industry-specific regulations.
Cause of Loss
With effect from February 1, 2026, the Indian Finance Ministry approved a 40% increase in GST and a higher excise levy on cigarettes, ranging from ₹2,050 to ₹8,500 per 1,000 sticks depending on length. The shares of ITC, a major FMCG operator with a sizable tobacco business, fell 10% in one day—the largest single-day decline in six years—and then another 5% the next day, reaching a 52-week low of ₹345.25 on the NSE.
LIC's Exposure
LIC is one of the biggest owners in ITC, owning 198.58 crore shares, or 15.86% of the company. As part of a larger ₹72,300 crore erosion for all ITC shareholders in recent months, the two-day ITC collapse resulted in a mark-to-market loss of nearly ₹11,460 crore for LIC.
Market Impact
According to experts, ITC may increase cigarette prices by as much as 40% in order to offset taxes, which might reduce demand and volumes. FMCG companies were under pressure as a result, although overall markets held up well despite encouraging developments in other industries.
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