The new year has started on a rough note for investors — especially for LIC. After the government announced higher excise duty on cigarettes, ITC shares nosedived, eroding thousands of crores in investor wealth within just two trading sessions — with LIC taking the biggest hit.
The beginning of 2026 turned into a nightmare for stock market investors, particularly for the state-run insurance giant LIC.
The government’s announcement to impose excise duty on cigarettes led to a massive sell-off in FMCG major ITC. Within just two days, ITC shares collapsed like a house of cards, causing sharp losses not only to retail investors but also to LIC, whose holding value declined by thousands of crores.
The first two trading sessions of 2026 proved extremely disappointing for ITC. Because of the government’s strict decision to increase tax on cigarettes, ITC shares fell more than 14 percent.
On January 2, the stock slipped to ₹345.25, marking its 52-week low.
This fall is significant because ITC has no promoter or promoter group stake. As per FY2026 July–September data, 100 percent of the company’s shares are held by public shareholders, meaning the decline directly impacted institutional investors and the general public.
LIC is the single largest victim of this decline. LIC holds 15.86 percent in ITC — a massive stake.
On December 31, 2025, LIC’s total investment value in ITC was ₹80,028 crore.
After the heavy sell-off, it dropped to ₹68,560 crore.
This means LIC lost over ₹11,468 crore in just two days.
Other state-owned insurers were also hit:
GIC (1.73% stake) lost ₹1,254 crore
New India Assurance (1.4% stake) lost ₹1,018 crore
Together, these three companies suffered losses of nearly ₹13,740 crore.
There is some relief for investors — this loss is currently classified as “notional loss”.
It is only reflected on paper and becomes real only if the insurers sell their holdings at current lower prices. Since insurance companies usually invest with long-term horizons, they often hold through market volatility.
Meanwhile, ITC’s market capitalization dropped by ₹72,000 crore in two days, falling to ₹4,38,639 crore.
However, there was slight recovery by the end of January 2, with the stock closing at ₹350.10, down around 4 percent. Interestingly, LIC’s own stock managed to rise 1 percent, closing at ₹861.