According to gray market tracking dealers, investors should expect pop-listings from state-run insurance companies because of low subscription figures and volatile market sentiment.
Abhay Doshi, co-founder of Unlisted Arena, said LIC could probably be listed near issue price and investors may not get a decent listing pop due to the sharp correction in the secondary market lately.
“The problem in the Indian primary market is that there will be enough supply in the market once the biggest and retailers and HNIs are listed to exit the counter. This could be further reversed,” added the enthusiastic Gray Market Tracker.
The issue was subscribed 2.95 times, led by strong claims from insurer employees and policyholders. However, retailers, QIB and HNI investors have largely stopped the bidding process.
Sonam Srivastava, Smallcase Manager and founder of Wright Research, says LIC’s premiums in the gray market have plummeted in the past few weeks due to the negative sentiment in the secondary market.
“We expect the IPO to be listed at an equal or slightly premium, if the market is normal, the issue was heavily oversubscribed,” he added. “However, if volatility increases, we will see shares listed at a negative premium.”
LIC was by far the largest IPO in the domestic primary market as the government sold 22.13 crore shares or 3.5 per cent shares of the company, valued at Rs 6 lakh crore, which is about 1.12 times the embedded value of Rs 5.4 lakh crore.
AYUSH Agrawal, Senior Analyst,
A flat list is expected for LIC on Tuesday. However, a moderate float of the stock may limit the post-listing fall of the stock.
“Increased inflation figures, FII outflows, currency weakness, geopolitical and rate-raising concerns, current markets are experiencing significant volatility, which has led to sell-offs in equity markets around the world,” he added.
According to market analysts, the insurance business is of a long-term nature. Agrawal advises investors to stay with the company for a long time even though it is listed at a discount.