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Will LIC get an early seat in major global and domestic indices post listing?

market | IST

Will LIC get an early seat in major global and domestic indices post listing?

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Experts tracking alternative and quantitative research at institutional brokerages believe that India's largest insurer, LIC, will not be able to make it to the big indices just after listing

It is day two of the mega LIC IPO and a question on the mind of many investors is if LIC will get an early seat in major passive global and domestic indices after the listing.
Experts tracking alternative and quantitative research at institutional brokerages believe that India's largest insurer will not be able to make it into MSCI, FTSE, Sensex and Nifty50 indices in the immediate future and the primary reason for the same is the low free float,  which is a measure of actual availability of stocks of a company for public investment.
The government of India is looking to dilute 3.5 percent stake in LIC at a market capitalization of Rs 6 lakh crore (at the upper end of the price band).
For a stock to get included in Nifty50 & Sensex it should be available for trading in the F&O segment (at least 6 months of trading history required).
According to the Edelweiss alternative and quantitative desk, LIC will not immediately see an early inclusion in any of the widely tracked passive indices as "for the MSCI index, at least Rs 10.7 lakh crore market cap after the first or second of trading will be required."
For other indices like the FTSE index, inclusion will be only possible after the September 2022 review.
Another brokerage, IIFL alternative research,  also says that based on preliminary analysis, LIC is unlikely to get placed in any of the major indices like the Nifty50 and BSE Sensex.
According to IIFL, for FTSE, the investible market cap inclusion level is $4.31 billion and with LIC's market capitalisation expected to be below this threshold, this looks difficult.
Watch the accompanying video of CNBC-TV18’s Nimesh Shah for more details.
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