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LIC shares may have a discounted debut, signals grey market premium (GMP)

By Asit Manohar
LIC IPO GMP has tumbled around 125 per cent in last 10 days as shares of LIC were available at a premium of ₹92 ahead of its subscription opening, say market observers.


Market observers said that LIC IPO GMP today is minus 25, which means LIC IPO grey market price has remained almost steady for last 24 hours. LIC IPO GMP yesterday was minus 26. Ahead of LIC IPO opening, shares of the insurer were available at a premium of 92. So, in near 10 days, LIC IPO GMP has tumbled around 125 per cent. Market observers said that negative trend in the secondary markets have done major damage to the grey market sentiments in regard to LIC IPO. They said that ever since opening of LIC IPO, stock market mood across world has remained bearish and this could be the major possible reason for LIC IPO GMP fall.

What this GMP mean

As LIC IPO GMP today is minus 25, it means grey market is expecting that LIC IPO listing would be around 925 ( 949 - 25), which is near 3 per cent lower from LIC IPO price band of 902 to 949 per equity share.

So, grey market is signaling that LIC shares may have a discounted debut if there is no trend reversal in secondary market sentiments.

However, stock market experts said that grey market premium is not an ideal indicator about success of failure of a public issue. They said that GMP is an unofficial data, which is non-regulated as well. So, one should look at the balance sheet of the company instead of grey market sentiments as financials of the company gives better and concrete fundamental picture of the company.

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