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LIC shares trade at discount in grey market ahead of listing today

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LIC shares trade at discount in grey market ahead of listing today

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LIC IPO listing: Dealers say the grey market premium (GMP) trend hints at a flat or negative listing for LIC shares on Tuesday, May 17. LIC's IPO, which was open for subscription from May 4 to May 9, saw an overall subscription of almost three times the shares on offer, with strong participation from employees and policyholders.

Shares of Life Insurance Corporation of India (LIC) — which is set to make a debut in the secondary market today, May 17 — gave up its premium in the grey market, an unofficial market for unlisted securities.

Dealers said LIC shares changed hands at a discount of Rs 16-19 in the grey market on Monday, a day ahead of the big listing on bourses BSE and NSE.
Here's what the grey market trend looks like ahead of the LIC IPO listing on May 17:
DateGMP
May-16+/- Rs 12
May-13+/- Rs 10
May-12+/- Rs 10
May-11+/- Rs 10
May-10Rs 30
May-09Rs 40
May-07Rs 60
May-06Rs 50
May-05Rs 65
May-04Rs 65
May-03Rs 85
May-02Rs 85
Apr-30Rs 90
Apr-29Rs 75
Apr-28Rs 45
Apr-27Rs 25
Apr-26Rs 25
Source: IPO Watch
"The financial behemoth got a mixed response despite its attractively priced valuations on account of subdued market conditions. The current sentiment in the grey market indicates at an at par to discount listing for LIC. However, if market sentiments stabilise or improve till listing, we may see a positive impact," Abhay Doshi, Co-Founder of Unlisted Arena —a portal that tracks grey markets and deals in unlisted securities, told CNBCTV18.com.
"One should limit their expectations as far as listing gains are concerned," he said. 
LIC's IPO, which was open for subscription from May 4 to May 9, saw an overall subscription of almost three times the shares on offer, with strong participation from employees and policyholders.
Dinesh Gupta, Co-Founder of UnlistedZone — another firm that deals in unlisted shares — expects the LIC listing to be at par (no discount, no premium) or some discount.
CategorySubscription (No. of times the shares reserved)
QIB2.8
NII2.9
Retail2
Employee4.4
Policyholder6.1
“Despite gloomy market sentiments, the LIC IPO successfully managed to sail though with better-than-expected subscription figures... The grey market premium is in negative territory mainly due to depressed global markets, which are in the bearish zone since the onset of the Russia-Ukraine war. Selling pressure continues in the domestic market wherein foreign institutional investors (FIIs) have remained net sellers," said Prashanth Tapse, Vice President (Research) at Mehta Equities.
He expects a soft listing for LIC, at a premium of discount to the tune of five percent from the issue price. "LIC was never considered a listing gain candidate, but rather it should only be looked at from a long-term view...  Those who are planning to buy on the listing day should accumulate by taking volatility as opportunity," he said.
The listing of LIC shares comes at a time when the market has continued to fall mirroring weakness across global markets amid concerns about rising interest rate hikes, worsening inflation and receding world economic growth.
Last week, the Nifty50 index lost 629 points amid weakness across sectors.
LIC shares were available for bidding in a price range of Rs 902-949 apiece in multiples of 15. The mega IPO — India's biggest public offer ever — was entirely an offer for sale of shares up to Rs 21,000 crore.
Prior to the bidding process, LIC raised Rs 5,627 crore by allocating 5.9 crore shares to anchor investors. As much as 71 percent of the life insurance major's anchor book was subscribed by domestic mutual funds.
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