LIC GMP down 125% in last 10 days; Here’s what investors need to know

LIC IPO GMP today: Life Insurance Corporation (LIC), which recently completed India’s largest ever public offering, completed its share allotment process on May 12. However, the signals coming from the gray market are not very encouraging. According to market watchers, LIC’s share price is quoted at a discount of Rs 25 in the gray market today. According to market watchers, LIC’s share price is trading at a discount of Rs 25 in the gray market today. They said LIC IPO GMP (grey market premium) was in the negative zone for the third day in a row, which cannot be considered a good development ahead of the stock quote date.

LIC IPO Latest GMP today

Market watchers who follow LIC shares in the gray market said that LIC IPO GMP is today minus 25 rupees, which means that the price of the gray market LIC IPO has remained almost stable for the past 24 hours. . LIC IPO GMP yesterday was minus Rs 26. Prior to the opening of LIC IPO subscription, shares of the insurer were available on the gray market at a premium of Rs 92. GMP fell by around 125%. Market watchers said the negative trend in secondary markets has done significant damage to gray market sentiments regarding LIC’s IPO. They stated that since the opening of the LIC IPO, the mood of the stock market across the world has remained bearish and this could be the main possible reason for the fall of LIC IPO GMP.

LIC IPO: what does GMP mean?

The gray market is an unofficial market where individuals buy/sell IPO shares before officially going public. The GPM is a premium amount at which gray market IPO shares are traded and it reflects how the IPO is likely to react on the day of its listing. Trade analysts believe that the lackluster response the IPO has received from foreign and institutional investors is the main reason for its declining gray market appeal. The deterioration in the Indian and global markets further added to the selling pressure in the unofficial market.

However, stock market experts have said that the gray market premium is not an ideal indicator of the success or failure of a public offering. They said that GMP is an unofficial data, which is also not regulated. Thus, one should look at the company’s balance sheet instead of the gray market sentiments, because the company’s finances give a better and more concrete fundamental picture of the company.

Speaking about the LIC GMP, Abhay Doshi of Unlisted Arena said: “The financial giant has received a mixed response despite valuations at attractive prices due to lackluster market conditions. Current sentiments indicate at par the discounted listing, however, if market sentiments stabilize or improve, we could see a positive impact. Therefore, it is appropriate to limit their expectations of listing gains.”

LIC IPO shares are expected to be listed on May 17, 2022 on public stock exchanges. LIC’s IPO was oversubscribed 2.95 times in the last day, which could be seen as a healthy response from investors, although FII participation remained subdued. The IPO received offers for 47.83 crores of equity shares against 16.2 crores of equity shares offered. The policyholders’ share was subscribed 6.11 times while the employees’ share was bid at 4.39 times. The retail investors’ offer was subscribed 1.99 times and the non-institutional investors’ share was subscribed 2.91 times.

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