Shares of Life Insurance Corporation of India (LIC), the country's largest insurance company, have been experiencing significant growth in recent days, reaching a six-month high on Tuesday after increasing by 10 per cent over the last two trading sessions. This rise in the company's shares comes at a time when the BSE Sensex Index has fallen by 1 per cent in the last month. The increase in LIC's shares has also boosted the company's market capitalization (MCap) to INR 4.72 lakh crore (approximately $65 billion).
There are several factors contributing to the rise in LIC's shares, according to market experts. One of these is the government's proposal to issue composite insurance licenses, which is expected to increase insurance penetration in the country. Additionally, the appointment of a government representative as the head of LIC from the private sector has also had a positive impact on the company's shares.
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LIC has also been actively increasing its stake in various companies, including Indian Railway Catering and Tourism Corporation and HDFC AMC. The company's shares have also been boosted by its strong financial performance, with a net profit of INR 28,000 crore (approximately $3.8 billion) in the first half of the current fiscal year, an increase of 14 per cent compared to the same period last year. The company's solvency ratio, a measure of financial stability, has also improved to 2.27, well above the regulatory requirement of 1.5.
In addition to its financial performance, LIC's consistent dividend payments and relatively high yield have made it an attractive option for investors seeking steady income. While it remains to be seen whether the company can maintain this momentum in the coming months, the combination of strong financials, government initiatives to increase insurance penetration, and attractive dividends has contributed to the recent all-time high for LIC's shares.
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