The listing of the Life Insurance Corporation (LIC) on the bourses at a discount of 9.4 percent over the issue price had an impact on most of its listed peers with their shares recording lacklustre trading.
In contrast with the hype created before the launch of the country's largest public offer, with the record number of demat accounts being opened, the response from the investors was quite lukewarm. Policyholders of LIC who submitted bids worth six times their portion, were the strongest participants to the Rs 21,000-crore public issue. Retail investors and LIC employees also showed some interest but the issue failed to enthuse qualified institutional and non-institutional investors.
This, coupled with the prevailing negative market sentiments, FII sell-off, rising inflation and interest rate hikes further dented the response for the IPO of India’s largest asset manager.
After listing at Rs 872 a share, the stock slid further down to Rs 860, before making a small recovery to reach Rs 918.95, which was the day’s high till 11.30am and the stock traded at Rs 887.5, down Rs 61.5 or 6.5 percent from its issue price.
“As observed, the majority of big IPOs have not given a strong listing debut gains,” said Mohit Nigam, Head - PMS, Hem Securities. “We believe that personal savings and awareness regarding insurance will increase enabling the sector to outperform in the long run and will indirectly benefit LIC as it is the market leader in this sector.”
He advised that long-term investors should continue to hold the scrip while short-term investors can wait to enter at a lower price.
The benchmark indices put up a very strong show in the morning trade and the 30-pack BSE Sensex traded higher by 900 points at 53,874.53 at 11.30am. The benchmark Nifty50 was trading at 16,122.35 with a gain of 280 or 1.78 percent.
All the sectoral indices on the National Stock Exchange were trading in green, depicting the strength and depth of the market for the day.
Among the listed insurance providers, India’s most valued private insurer HDFC Life Insurance Company Ltd opened on a flat note compared to its previous close at Rs 549.85 and traded in that range through the entire morning session.
The largest insurance provider in the private sector, SBI Life Insurance Company Ltd, though opened on a flat note with a marginal loss, traded with a gain of 1.2 percent or Rs 12.55 at Rs 1,057.2, while the third-largest life insurer ICICI Prudential Life Insurance Company Ltd was down Rs 4.55 or 0.91 percent at Rs 495.75 after opening flat in the morning.
Although the overall BFSI (banking, financial services and insurance) sector made gains today, experts believe that the tepid listing of LIC has impacted the day’s performance of other listed life insurance players.
The experts, however, see a silver lining as the biggest IPO in the history of Indian stock markets comes to an end.
“Though LIC listing has been below the issue price of Rs 949, given the attractive valuations and stability in the markets, we expect some buying interest in the stock both from retail and intuitional investors,” said Hemang Jani, Head - Equity Strategy, Broking and Distribution, Motilal Oswal Financial Services Ltd.
Since large amount of money has been released after the listing of LIC, part of this money could get diverted into equity markets, he said.
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