Mumbai: On Tuesday, a drop of 15 percent was noticed in the ITC shares in the morning. Life Insurance Corporation of India (LIC) suffered a notional loss of Rs 7,000 crore in the first half-an-hour. LIC held 16.29 per cent in the cigarette maker as of June 30, 2017.
The domestic insurance companies lost Rs 10,000 crore together. FPIs took a Rs 9,000 crore hit in the biggest fall in of ITC stock since 1992. LIC has been raising stake in the cigarette maker from 12.36 percent 4 years ago to 14.34 percent as of June 2016.
Sukumar Rajah of Franklin Templeton Investments said his firm looks at three important matrix in stocks: quality, sustainability and growth. “An industry like tobacco has very poor sustainability and because of this issue, it has never been a big portion in our portfolio. Today is no different,” Rajah told ET Now.
LIC chairman V K Sharma defended LIC’s investment in the tobacco major. A public interest litigation had been filed in the Bombay High Court in April against LIC and four other state-run general insurance companies for investing in cigarette makers, as tobacco is considered one of the biggest killers in India.
Following the GST announcement, the stock fell 15 percent on Tuesday in the morning. It hit a low of Rs 276 on BSE, with its m-cap falling by over Rs 45,000 crore. ITC is the fourth largest stock in terms of market value.
