LIC IPO GMP: What is the gray market signal for LIC, Delhivery and other IPOs?

New Delhi: As liquidation in the secondary market accelerates, premiums for listed companies are sinking on the gray market.

Among the four candidates listed, Life Insurance Corporation of India (LIC) is the most affected. Its shares trade at a discount of Rs 25 on the unofficial market against their issue price of Rs 949. A lower-than-expected response from investors, despite the IPO’s conservative price, is hurting LIC’s share premium.

Other numbers have not yet closed for subscription.

DIPAM secretary Tuhin Kanta Pandey reported that LIC’s initial public offering will be awarded on May 12, while the company is likely to list on Tuesday, May 17.

Dealers who follow the gray market said that publicly traded company sentiment is affected by the sharp correction in the market, with LIC in the spotlight. It is a guiding factor for other issues as well.

“If the broader market remains unstable and sentiment doesn’t improve, there are chances that LIC will fall further into the gray market and the insurance giant could disappoint trading,” said Abhay Doshi, co-founder of UnlistedArena.

He added that other issues have some time before they are listed, and in that time, their gray market premiums could be affected by many factors. However, sources tell that gray market deals have been reduced.

Among the other three companies, Delhivery was trading at a minimum or minimum discount of Rs 5 on the unofficial market. Prudent Corporate Advisory Services is also listed at par. Your issue will close today.

Analysts said these problems are very costly and investors are wary of new-age start-up stocks. Also, the negative numbers on the balance sheet are hurting sentiment.

Sonal Minhas, founder of Prescient Capital, said bear market IPOs are a great opportunity to pick high-quality businesses at a reasonable price.

“We would prefer to wait another 6 months of the bear market to start looking at IPOs again,” Minhas said.

Venus Pipes and Tubes is the only issue that has been able to maintain some gains on the gray market. Despite the recent drop, the company is trading at a moderate Rs8-10 premium, thanks to the small size of the initial public offering and strong investor interest.

Varun Sridhar, CEO, Paytm Money, says he is bullish on the primary market, thanks to a host of new offerings hitting the streets in the coming weeks.

“Although market sentiment is generally weak for now, we encourage investors to think long-term and properly study the company’s fundamentals to decide if it matches an investor’s risk appetite and asset allocation strategy,” he added.

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