LIC IPO has witnessed a slide of sorts in the informal market amid a sharp correction in broader markets. While it is natural for grey market premiums to come under pressure during widespread selloff, declining LIC IPO GMP maybe making IPO investors extra jittery given the fact that it is India’s biggest public offer yet. The performance of most of the largest IPOs on listing and afterwards in India hasn’t been very impressive.

It is noteworthy that LIC’s grey market premium have come down from a high of INR80 per share on 4 May 2022 to INR40 per share today. Kostak and Subject to sauda rates have also seen a similar fate. During the same timeframe, Nifty 50 index has corrected from 17,068 to 16,356, implying over 4% decline. BSE Sensex has also traversed a similar path. Indian markets are following their US counterparts like NASDAQ while domestic headwinds of higher interest rates and growth concerns aren’t helping matters either.

LIC IPO GMP Daily Trend

Declining LIC IPO GMP – Should you be concerned?

Declining LIC IPO GMP is certainly a reason to worry for IPO investors many of whom invest for listing gains and sell on the first day. Nevertheless, there is a discount of INR40 per share for retail investors while policyholders are entitled for a discount of INR60 per share. These discounts should help investors in holding on to their nerves. For retail investors, expected listing price as on today is INR989 per share which translates into decent listing gains of 8.8%.

Another cause of concern among investors is LIC’s shrinking market share. This isn’t completely unfounded as IPO Central also highlighted it in its LIC IPO review but it is well-known that the industry has got a long runway of growth which should help all market players including the biggest. It also helps that brokerage houses analysts have unanimously given buy recommendations for the IPO on the back of lower valuations, smaller IPO size and future growth.

As such, the decline in LIC IPO GMP shouldn’t impact investors’ decision to subscribe or avoid the upcoming IPO. Declining LIC IPO GMP is surely going to keep HNIs away which mostly finance their bids through short term loans. HNI investors don’t get any discount on issue price and rather pay interest on their borrowings which means they need to be extra cautious and prudent with IPO investments. The absence of HNIs also means less selling pressure on the stock on listing day. A big plus for longer term IPO investors.

Overall, for retail investors, there is little to worry about the declining LIC IPO GMP but HNI investors have a lot to lose which is why their inactivity. QIBs, especially FIIs, have already made their stance clear through absence in anchor book.