US-Iran Conflict Wipes Out Rs 70,000 Cr From LIC Portfolio

Market Overview - The BSE Sensex and Nifty 50 have declined approximately 4.5% each since the onset of the West Asia conflict [5][6] - Mid and small-cap indices experienced steeper losses, with the Nifty MidCap and Nifty SmallCap indices dropping around 5% each during the same period [5] LIC Portfolio Impact - Life Insurance Corporation (LIC) has faced a significant erosion of Rs 70,105 crore in its stock portfolio due to the ongoing conflict, with its portfolio value decreasing from Rs 14.88 trillion on February 27, 2026, to Rs 14.17 trillion on March 9, 2026, marking a decline of 4.7% [3][4][6] - Year-to-date (YTD), LIC's total portfolio loss stands at 7.1%, equating to Rs 1.08 trillion as of March 9, 2026 [4] Sector-Specific Losses - Banking stocks were the most affected, contributing 21.8% (Rs 15,293 crore) of LIC's total losses, primarily due to declines in State Bank of India, ICICI Bank, and HDFC Bank [6][7] - Larsen & Toubro (L&T) also saw a significant decline, with a nearly 11% drop (Rs 7,609 crore) in its equity portfolio during this period [7] L&T Exposure and Forecast - L&T has substantial exposure to West Asia, with 75% of its international order book of Rs 3.57 trillion linked to the region, making it vulnerable to the ongoing conflict [10][11] - Analysts predict that L&T's core earnings could be negatively impacted by 11-12% for FY27E/28E due to potential execution delays and low order inflow, particularly in the hydrocarbon segment [12] - Current estimates suggest a 10% impact on FY26 order inflow for L&T, with around 12,000-15,000 workers currently engaged in West Asia [13] Analyst Ratings and Valuations - Analysts from Emkay Global maintain a 'Buy' rating for L&T, with a target price of Rs 4,800, while adjusting core business valuations to account for current volatility [13][14] - Motilal Oswal also retains a bullish long-term outlook on L&T but has adjusted the two-year forward target price to Rs 4,400 from Rs 4,600, reflecting near-term headwinds [14] Top Stocks Impacting LIC's Portfolio - The top stocks affecting LIC's portfolio include: - State Bank of India: 9.23% holding, equity valuation of Rs 92,856.43 crore, notional loss of Rs 8,730.38 crore - Larsen & Toubro: 12.69% holding, equity valuation of Rs 66,322.80 crore, notional loss of Rs 7,608.99 crore - ICICI Bank: 5.92% holding, equity valuation of Rs 43,987.23 crore, notional loss of Rs 3,498.59 crore - HDFC Bank: 4.77% holding, equity valuation of Rs 53,351.42 crore, notional loss of Rs 3,064.27 crore [15]