The Life Insurance Corporation of India, which debuted in the main market with a bang, has now entered the Dalal Market. The top insurance firm in India is presently experiencing a bad market sentiment after being placed on stock exchanges.
Because the offer was oversubscribed 2.95 times, it began trading on exchanges at Rs 872 per share, down 8.11 percent from the SME IPO price of Rs 949.
As dealers begin to monitor the grey market, investors should temper their expectations for state-run insurers to list, as sentiments are harmed by low subscription numbers and a chaotic market.
There are no listing gains for LIC investors, according to the Grey market.
The Navratna corporation has already reduced its size, anticipating dwindling investor interest following the Russia-Ukraine conflict.
But even that couldn't save it from the Indian Central Bank's surprise rate hike and a slew of other global factors that weighed on the stock market.
The grey market has lost interest in stocks as well.
It was stock trading at a premium in the grey market a few days ago because many analysts thought the issue was underpriced. However, it has dropped to a discount of ten percent from the top end of the price range of Rs 949 today.
Those fortunate few who were given shares in the hopes of profiting from the listing must now forget about it.
This is mostly due to a drop in benchmark indices, which are concerned about rising crude oil costs and inflation data. In the previous month, the Sensex and Nifty 50 have lost about 10% of their value, reflecting declines in Asian and US markets.
On Tuesday, Aayush Agrawal, Senior Analyst at Swastika Investmart, predicted a flat listing for LIC. The stock's small float, on the other hand, may limit the stock's post-listing drop.
"Increased inflation numbers, FII outflows, currency weakening, geopolitical and rate hike-related concerns, current markets are witnessing unusual volatility, causing sell-offs in equities markets around the world," he added.
The insurance industry, according to the market expert, is a long-term business. Even if the company lists at a discount, Aayush Agrawal advises investors to stick with it for the long haul.
Why is the LIC IPO GMP Negative?
Analysts explained why there is negative grey market sentiment about the LIC IPO "The unofficial grey premium is currently in negative territory, owing to weak global markets that are in the bearish zone. We anticipate a soft listing at +/- 5% of the offer "price."
The IPO Market is Slowing Down
The Indian IPO market, which grew at a breakneck pace in 2021, has slowed significantly this year.
This reflects the impact of geopolitical tensions, stock market volatility, a price correction in overvalued equities from recent IPOs, as well as concerns about rising commodity and energy prices and slower economic development, according to stock market research conducted by top analysts.
No significant Losses for Retailers, Employees, or Policyholders
Prior to the LIC shares being listed on the stock exchange, the stock was trading at a slight discount in the grey market.
Analysts had varied feelings about the outcome. Retail investors, LIC staff, and LIC policyholders, on the other hand, received discounts.
With this in mind, the break-even price for retail investors and LIC workers was Rs 904 per share, which was 5% lower than the issue price
Meanwhile, LIC policyholders were awarded a reduction of Rs 60 per share, resulting in a break-even price of Rs 889 per share. Policyholders, retail investors, and LIC staff will not suffer significant losses due to the listing price of Rs 872 per share.