LIC IPO has witnessed a massive slide in grey premium in the informal market amid a sharp correction in broader markets. While it is natural for grey market premiums to come under pressure during widespread selloff, latest LIC IPO GMP status is making IPO investors extra jittery given the fact that it is India’s biggest public offer yet. The performance of most of the largest IPOs on listing and afterwards in India hasn’t been very impressive.
It is noteworthy that LIC’s grey market premium have come down from a high of INR80 per share on 4 May 2022 to a discount of INR15 per share on Friday. Kostak and Subject to sauda rates have also seen a similar fate and have stopped trading altogether. During the same timeframe, Nifty 50 index has corrected from 17,068 to 15,782, implying over 7.5% decline. BSE Sensex has also traversed a similar path. Indian markets are following their US counterparts like NASDAQ while domestic headwinds of higher interest rates and growth concerns aren’t helping matters either.
LIC IPO GMP Daily Trend
|Date||LIC IPO GMP||Kostak||Subject to Sauda|
|14 May 2022||(INR15, discount)||–||–|
|13 May 2022||(INR15, discount)||–||–|
|12 May 2022||(INR10, discount)||–||–|
|11 May 2022||(INR5, discount)||–||–|
|10 May 2022||INR10||–||–|
|9 May 2022||INR10||–||–|
|7 May 2022||INR50||INR900||INR1,200|
|6 May 2022||INR50||INR1,000||INR1,400|
|5 May 2022||INR60||INR1,100||INR1,600|
|4 May 2022||INR80||INR1,400||INR2,000|
|2 May 2022||INR70||INR1,300||INR1,800|
|30 Apr 2022||INR60||INR1,200||INR1,600|
|29 Apr 2022||INR50||INR1,000||INR1,400|
|28 Apr 2022||INR40||INR800||INR1,300|
|27 Apr 2022||INR25||INR500||INR900|
LIC IPO GMP status in negative – Should you be concerned?
LIC IPO GMP status in a discount is certainly a reason to worry for IPO investors many of whom invest for listing gains and sell on the first day. Nevertheless, there is a discount of INR45 per share for retail investors while policyholders are entitled for a discount of INR60 per share. These discounts should help investors in holding on to their nerves. Expected listing price as on today is INR934 per share which still translates into small listing gains of 3.3% for retail investors.
Another cause of concern among investors is LIC’s shrinking market share. This isn’t completely unfounded as IPO Central also highlighted it in its LIC IPO review but it is well-known that the industry has got a long runway of growth which should help all market players including the biggest. It also helps that brokerage house analysts have unanimously given buy recommendations for the IPO on the back of lower valuations, smaller IPO size and future growth.
LIC IPO GMP status has kept HNIs away which mostly finance their bids through short term loans. HNI investors don’t get any discount on issue price and rather pay interest on their borrowings which means they need to be extra cautious and prudent with IPO investments. The absence of HNIs also means less selling pressure on the stock on listing day. A big plus for longer term IPO investors.
What should you do?
Nevertheless, there is going to be substantial selling pressure from retail investors who would like to sell their stocks at first opportunity. Given the topsy turvy market conditions, buyers may not like to take long positions which may increase the selling pressure.
So, what should be your strategy? If the latest LIC IPO GMP status in negative territory is any indication, short term investors may be better off booking their profits/losses early. The ongoing conflict between Russia and Ukraine is another concern for the wider markets which may force investors to see some serious drawdowns.
Overall, for retail investors, the discount is likely to be helpful in containing losses or booking small gains. In either case, LIC IPO GMP status in negative is likely to have a strong bearing on the stock price. However, HNI investors have a lot to lose which is why their inactivity in the IPO. QIBs, especially FIIs, have already made their stance clear through absence in anchor book.