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LIC IPO shares may list with 12% premium; BSE Sensex, Nifty look to offer 15% return in long-term | INTERVIEW

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Life Insurance Corporation of India’s (LIC) initial public offering, which has been subscribed two times so far, will close for subscription today

Life Insurance Corporation of India’s (LIC) initial public offering, which has been subscribed two times so far, will close for subscription today. The issue continues to receive strong interest from employees, policyholders and retail investors. Sandip Sabharwal, investment advisor, expects a premium listing of LIC. In an interview with Surbhi Jain of Financial Express Online, Sandip Sabharwal said that LIC may list with 10-12 per cent premium. On stock market movement, Sabharwal sees up to 15 per cent returns in the long-term. Here are edited excerpts from the interview.

Amid rising interest rate regime, should investors rejig their portfolio?

As the macro environment changes tactical allocation changes in terms of holding some cash or shifting more to fixed income and alternative assets makes sense. However, the longer term economic cycle in India is still on a substantial growth path as such major reallocations might not be required. The best strategy is to slow down investments and hold cash and deploy as valuations become more conducive. High sustained inflation is normally negative for both equities and bonds.

Do you see RBI hiking repo rates in June MPC? If yes, then why?

They are way behind the curve and in the endeavour to get ahead aggressive monetary policy could be counter productive as it will slow down growth without bringing down inflation. An aggressive CRR hike combined with a 40 basis point hike should first be allowed to be absorbed by the market and then next action taken. Inflation has been on the upswing for many months now but the MPC and RBI turned a blind eye. Now that they have opened their eyes their actions should not hurt the fledgling economic recovery. In my view they will hike rates again but it will be the wrong move.

In which sectors do you think investors should invest for a 3-5 years view?

Consumer stocks have started to become attractive. As markets correct, financials will also become attractive. A new capital expenditure cycle has started and as such capital good companies should do well. There will be opportunities in many other sectors as the market correction plays out.

Seeing the LIC subscription numbers, what should investors expect on listing day?

That’s tough to predict but a 10-12% premium should be possible assuming markets remain at similar levels.

What is your near to medium term view on BSE Sensex, Nifty 50, and Nifty Bank?

This year will be tough for the markets. Over the long term markets should be able to deliver 12-15% returns.

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