In December 2021, 17 new IPOs were launched via the primary market route which helped the companies in raising Rs. 16,700 crore. In 2020 and 2021, there were hundreds of successful IPOs and the market was cheerful for the longest time in the history of IPOs. It flourished as a part of a bull run. However, the benchmark indices made a lifetime high in October and since then, the markets have been very jittery.
Even the IPO market was affected after the correction began. The effects were apparent when the IPO of Life Insurance Corporation of India (LIC) was postponed due to rising threats from market volatility. A successful IPO cannot be launched when the investors are running away from the stock market. But the question is, will the LIC IPO be able to revive the bull run again? Let us look at the reasons why the bull run halted, to find the answer.
Effects of Russia-Ukraine Conflicts
Due to the attacks conducted by Russia on Ukraine, the world markets plummeted, sending the bull run to a major pause. Though the Indian index did not fall significantly to change the trajectory to bear market, the US stock market fell more than 20% from the all-time highs. This not only affected the stock market and the new IPOs but also the crude and US WTI prices skyrocketed as Russia’s supply was impacted.
The world sanctions on Russia have made global trade with the country even more difficult. The dollar appreciated while the other currencies against it depreciated, including Indian Rupees. The major impact of this conflict on India was the withdrawal of foreign funds which increased the selling pressure even further. Unless this stops and foreign investors again start to look at India as an investment hub, the bull run might stay on halt. Support from foreign investors is crucial for the revival of the strong rally.
After all, it is the investor’s sentiments that drive the market run. If the investors start to infuse money into the market after gaining confidence, then the revival of the bull run can be certain. As of now, many investors who began their stock market journey have entered the stocks at higher levels, and are witnessing some level of drawdown.
Nifty has recovered more than 1500 points since it made a recent low near the 15,700 zones. After falling nearly 3000 points from the all-time high of 18,600 made in October, the Nifty has recovered about 50% of the fall by trading at 17,200 levels. Investors certainly need to get optimistic, not only for the new IPOs but also for the equity markets in general for the trend revival.
The pressure of LIC IPO Success
The market experts as well as the angel investors believed that the LIC IPO should be postponed to the next financial year since the Russia-Ukraine conflicts have made the markets very volatile. With investors’ money running towards developed economies, the pressure for LIC’s IPO success was quite high. Moreover, as the papers were filed by the government in February, they have time until mid-May to launch the IPO.
Now, the IPO is likely to launch somewhere in April and May. If the LIC does so, then a fresh set of papers will not be required to be submitted again. Also, the market conditions that were adversely affected by the Russia Ukraine war are likely to stabilize by then.
How successful the LIC IPO can become and what role will it play in reviving the bull run, that only time can tell. Global, as well as Indian investors, wait for the LIC IPO to launch.
When is the LIC IPO likely to launch?
The expected period for the LIC IPO is somewhere between mid of April and mid of May. If the government does so, fresh papers will not be required to be submitted by them.
What are the reasons for the bull run to halt?
Several reasons like rising inflation, rising in the new variant cases, the expected hike in the interest rates have been putting pressure on the markets. Later, the Russia-Ukraine war news gave a final push to the markets and resulted in the halt of a major bull run.
What does the IPO market for 2022 look like?
SEBI has approved as many as 35 companies for the launch of IPO. 33 more have sought approval. The companies are likely to raise about Rs. 1.4 Lakhs to Rs. 1.75 Lakhs via IPO route in 2022.
Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.