Shares of ITC witnessed a sharp selloff over two consecutive trading sessions after the government announced a new excise duty on cigarettes. The policy change led to heavy selling pressure in the stock, resulting in significant notional losses for major institutional investors, including state-owned insurance companies such as Life Insurance Corporation of India.
The stock declined sharply as investor sentiment weakened following the announcement, dragging ITC to a fresh 52-week low during intraday trade. The impact was most visible among large public-sector shareholders with substantial exposure to the company.
Stock Hits 52-Week Low After Two-Day Rout
ITC shares fell as much as 5 percent on January 2, touching a low of Rs 345.25 per share before recovering part of the losses later in the session. Over the past two trading days in 2026, the stock has dropped more than 14 percent, marking one of its steepest short-term declines in recent months.
Despite a partial recovery, the stock ended the January 2 session nearly 4 percent lower at Rs 350.10 per share. The decline extended ITC’s recent weak performance, with the stock down over 13 percent in the past five trading sessions and more than 15 percent over the last six months.
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Public Shareholding Dominates ITC’s Ownership Structure
As per the shareholding pattern at the end of the July-September quarter of the financial year 2026, ITC is entirely owned by public shareholders. The company does not have any promoter or promoter group holding, making institutional investors particularly sensitive to sharp market movements.
Among the largest shareholders are state-owned insurers. Life Insurance Corporation of India holds a 15.86 percent stake in ITC. General Insurance Corporation of India owns 1.73 percent, while The New India Assurance Company Limited holds a 1.4 percent stake.
LIC Bears the Largest Impact Among Insurers
The steep decline in ITC’s share price has resulted in substantial notional losses for these insurers. LIC, being the largest shareholder among them, has been hit the hardest. Based on the stock’s recent lows, LIC is estimated to be sitting on a notional loss of more than Rs 11,468 crore over just two days.
At the 52-week low levels, LIC’s total holding in ITC is valued at approximately Rs 68,560 crore, compared with about Rs 80,028 crore at the stock’s closing price on December 31. This sharp erosion in value highlights the scale of exposure LIC has to ITC.
Other State Insurers Also Face Heavy Erosion
The selloff has also weighed on the portfolios of other government-owned insurers. General Insurance Corporation of India has incurred a notional loss of around Rs 1,254 crore, while The New India Assurance Company Limited has seen its ITC investment decline by approximately Rs 1,018 crore in value during the same period.
Together, the three state-run insurers have seen nearly Rs 13,740 crore wiped off the value of their ITC holdings in just two trading days. These losses remain notional, as they would be realised only if the shares are sold at current depressed levels.
Market Capitalisation Shrinks Sharply
The impact of the selloff has not been limited to institutional portfolios. ITC’s overall market capitalisation has fallen sharply, with nearly Rs 72,000 crore erased in two days. The company’s market value now stands at around Rs 4,38,639 crore.
Despite the recent decline, the stock continues to trade at a price-to-earnings ratio of 22.59, reflecting market expectations amid heightened uncertainty following the policy change.
Insurance Stocks Remain Largely Stable
Interestingly, the broader impact on the insurers’ own share prices remained limited. LIC shares closed nearly 1 percent higher at Rs 861 per share on January 2, indicating resilience despite the sharp fall in the value of its ITC investment. Shares of General Insurance Corporation of India also ended the session marginally higher at Rs 380 per share.
The contrast between ITC’s steep decline and the relative stability of insurer stocks underscores that the losses remain on paper for now. However, the episode highlights how policy-driven changes can swiftly alter the valuation of even long-held institutional investments.
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