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LIC IPO investors have lost nearly a quarter of their capital in 23 days

LIC IPO investors have lost nearly a quarter of their capital in 23 days

LIC IPO investors have lost nearly a quarter of their capital in 23 days
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By Sandeep Singh  Jun 10, 2022 8:10:21 AM IST (Updated)

LIC shares hit a record low of Rs 720 apiece on Thursday, changing hands 24 percent below its IPO price — which means those who won allotment in the IPO lost nearly a quarter of their investment in just 23 trading sessions.

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Life Insurance Corporation (LIC) shares hit an all-time low of Rs 720.1 on Thursday, falling for the eighth back-to-back session. At this level, the newly-listed LIC stock changed hands 24 percent below the upper end of its IPO price range — which means those who won allotment in the IPO lost nearly a quarter of their investment in just 23 trading sessions.
The stock closed at Rs 722 apiece on June 9 — taking its loss to as much as 13.7 percent in eight back-to-back sessions.
LIC is in the fourth week since its debut in the secondary market. Its stock began its journey on bourses BSE and NSE with a weak listing on May 17, and has struggled to cross the issue price ever since.
Hemen Kapadia of KRChoksey Securities told CNBCTV18.com that investors looking to enter LIC should not go all out. "Only do it on dips and through a systematic investment plan (SIP)," he said.
The state-run life insurer's IPO — which was open for bidding from May 4 to May 9 — saw an overall suscription of almost three times.
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LIC — whose initial share sale was the largest the country has ever seen — entered the listed space at a time when benchmark indices were in correction territory. An index is said to be in the correction zone once it recedes more than 10 percent from its peaks.
As of Wednesday's closing price, the Nifty50 is 12.1 percent below its all-time high — scaled in October 2021.
The state-run life insurer's IPO — which was open for bidding from May 4 to May 9 — saw an overall suscription of almost three times.
CategorySubscription (No. of times the shares on offer)
QIB2.8
NII2.9
Retail2
Employee4.4
Policyholder6.1
"At the listing price, LIC did look attractive... At current levels for a long-term investor, it does look attractive. Also if you look at the valuation, at which it is currently available, definitely it makes sense to include this in the portfolio," Sudip Bandopadhyay, Group Chairman of Inditrade Capital, told CNBC-TV18 last week.
The LIC issue came at a time when there was "a general selling mood in the market", he said. 
The current sentiment in the IPO market reflects overall weakness on Dalal Street, owing to sustained selling by foreign institutional investors and fears about slowing economic growth amid aggressive hikes in interest rates.
IPO euphoria to return soon?
Kapadia believes it may be a while before investors return to the IPO market in a big way following strong activity in the past 2-3 years. "This year is going to be a difficult one to make money given where inflation, crude oil and interest rates are," he said.
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