NEW DELHI: Amid weak market sentiments, shares of LIC are trading at discount over its issue price of Rs 949 in the unofficial grey market, indicating a weak listing for the insurance behemoth on exchanges. The grey market premium (GMP) for LIC has fallen from nearly Rs 100 to Rs 10 on Tuesday and then on Wednesday, it turned negative.
As per traders who deal in the unofficial market, LIC is exchanging hands at a discount of up to Rs 20 a share. This is a very negative development for its biggest stakeholder- the Government of India- who had to cut the offer size to 3.5 per cent from 5 per cent earlier due to the prevailing market conditions.
Grey Market is an unofficial market where individuals buy/sell IPO shares before they officially hit the exchanges. GPM is a premium amount at which grey market IPO shares are traded and it reflects how the IPO is likely to react on its listing day. Trade analysts believe that a not-so-encouraging response the IPO received from foreign and institutional investors is the primary reason behind its falling appeal in the grey market. The worsening of the Indian and global markets further added to the selling pressure in the unofficial market.
“The IPO was priced quite reasonably. However, volatile market sentiments disturbed the mood of investors. We would have seen much higher subscriptions across all investor categories if market sentiments remained stable,” said Manan Doshi, co-founder, UnlistedArena.com.