Shares of Life Insurance Corporation of India (LIC) ended 8% lower than their issue price during their stock market debut on Tuesday. The stock ended at Rs 873 against its initial public offering (IPO) price of Rs 949.

At the closing price, LIC is valued at Rs 5,53,722 crore (Rs 5.54 trillion), making it the fifth largest company in India in terms of market capitalization.

Shares of Insurance Behemoth hit an intra-day low of Rs 860 and a high of Rs 920 in a single day, which did not come close to the issue price but offers small investors the opportunity to exit with a nominal profit.

Retail investors who bid for shares worth Rs 10,839 crore in the IPO got the allotment at Rs 905. Meanwhile, LIC's policyholders, who bid for shares worth Rs 10,669 crore, were allotted shares at Rs 889.

Shares worth nearly Rs 4,600 crore were traded on the first day, indicating that the majority of retail investors who applied in the IPO continued to remain invested.

The IPO attracted a record 7.3 million applications. After factoring in rejections, 6.13 million applicants got an allotment, the highest for any IPO in the domestic market, and some officials said it was the highest for any IPO worldwide.

However, most of them would be left with a sour taste because the listing belied the expectations of millions of investors, many of whom are from centres traditionally not big into stock market investing.

“LIC's listing is an important landmark. Nobody can predict the markets. We have been saying that the shares should be held not for a particular day but for longer. There is some protection to the retail investors as they get shares at a discounted rate,” said Tuhin Kanta Pandey, secretary, Department of Investment and Public Asset Management (Dipam).

Since LIC announced its IPO price at the end of last month, markets have been in a slump, falling as much as 8% amid fears of a global recession.

“The markets were jittery and we were not expecting a big listing. But shares will pick up as we go along. A lot of investors, particularly the policyholders, who missed out in the IPO, will look to buy shares from the secondary market,” said M R Kumar, chairman, LIC.

Kaku Nakhate, president and country head, Bank of America India, said: “Despite the macro environment characterised by heightened volatility, tepid global growth, inflationary concerns, the stupendous response received by the LIC IPO is a huge testament to the incredible inherent strength of LIC's business and an affirmation of the India growth story.”

The Rs 20,557 crore IPO, India's largest IPO, was subscribed just 2.95 times. Institutional investors subscribed to shares worth less than Rs 9,400 crore with foreign portfolio investors (FPIs) who have submitted bids worth less than Rs 1,800 crore.

Experts said the shares fell in the secondary market as institutional demand was paralyzed in the IPO and as a result they did not have enough follow-up buying. Many small investors tend to flip their shares on the day of listing, which increases downward pressure, they said.