LIC IPO: LIC’s gray market premium turned negative, know what it means for investors

LIC’s gray market premium turned negative

LIC’s issue was closed on 9 May. The issue is subscribed 3 times. However, the participation of foreign investors in the issue has been mixed. LIC stock may list on May 17.

With the closure of the issue of LIC, now the eyes are on how the business starts of this biggest issue of the country in the market. Experts are already speculating that LIC’s IPO ,LIC IPO) investors will not get very high listing gains, however now there are indications from the gray market that investors (Investor) may increase concern. In fact, due to non-participation of foreign investors in the issue, the gray market premium has become negative. That is, far from profit, chances are that the listing is less than the issue price. The issue of LIC was closed on 9 May. The issue is subscribed 3 times. However, the participation of foreign investors in the issue has been mixed. LIC stock may list on May 17.

what are the signs of gray market

According to a report by Money Control, the gray market premium of Life Insurance Corporation has turned negative at 15 per share on Wednesday. That is, there are indications so far that LIC’s stock may be listed below the issue price by Rs 15. Quoting sources, Money Control has written that there has been a steady decline in GMP for LIC. In the beginning, the GMP i.e. gray market premium was at Rs 93 to 95 per share. This has been the highest level of its GMP, after which it has come down to Rs 10 per share with the opening of the IPO and after being close to the same levels during the issue, it has now turned negative. Sources said that this fall in GMP has been seen due to weak market conditions as well as sluggish response from foreign investors to the issue.

What would happen if the gray market premium

A gray market is an informal market where parties to the market engage in trades or securities in which deals have not officially commenced. It is an over the counter market, in which SEBI, stock exchange or any other regulator is not involved. Market traders try to know the direction of official market deals on the basis of signals received from gray market. Gray market premium is the estimated premium on a security or stock by traders involved in these deals, which indicates the probability of getting that deal or stock higher than the issue price upon commencement of trading. Since this is an informal market, therefore, the price of gray market does not mean that investors get it in official business as well. However, gray market signals largely tell the direction of the security or stock. Along with this, continuous fluctuations can be seen in GMP.