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MUMBAI -Shares in Life Insurance Corp of India (LIC) slid 5% in their market debut on Tuesday, a fresh setback for the state-owned giant after its IPO, while record-breaking, raised far less for the government than initially envisioned.

The country's biggest insurer and its largest domestic financial investor was trading at around 900 rupees per share on Tuesday morning compared with its IPO price of 949 rupees, valuing it at around 5.7 trillion rupees or $73 billion.

The share price decline is in line with a slump in the broader market since LIC's IPO opened for subscription on May 4.

"We were not expecting on a big listing as markets were jittery, expect it to pick up," LIC's Chairman M. R. Kumar told reporters.

The government raised roughly 205 billion rupees or $2.7 billion from selling a 3.5% stake in LIC.

That compares with a fundraising goal of around 300 billion rupees in April that was in turn halved from earlier expectations after investors pushed back against lofty valuation estimates. Initial government estimates had valued LIC at around 17 trillion rupees.

Prime Minister Narendra Modi's administration had positioned the sale as the first and biggest of a wave of privatisations aimed at replenishing state coffers.

At one point on Tuesday, LIC shares plunged as much as 9% before paring losses.

"Sentiment is affected due to carnage in the broader market. Though there is some recovery today and yesterday, many stocks have corrected sharply from the recent high," Hemang Jani, senior group vice president at Motilal Oswal Financial Services.

LIC dominates India's insurance sector with more than 280 million policies. The 66-year-old company was the fifth-biggest global insurer in terms of insurance premium collection in 2020, the latest year for which statistics are available.

Investors have also been concerned that LIC's investment decisions, including those in loss-making state companies, could be influenced by government demands.