After listing, will there be a sharp entry in LIC shares in Sensex, Nifty, other indices?

“Even if we safely consider the low end of market capitalization as suggested by media reports, which comes 10.7 lakh crore, then its free float market cap will be approx. 53,500 crore,” said a note by Edelweiss Alternate Research.

According to Edelweiss Alternative Research, the free float of the issue assumed by the index providers will not be 5% but around 3.5%, which is calculated excluding lock in shares.

“Despite being a low float name, there is a moderate to high probability of the stock entering the MSCI index on a bullish basis. As in the case of large issuances, the index provider does not mandatorily require a minimum length of trading requirement or a foreign inclusion factor (FIF) of 0.15,” the brokerage said.

However, the most important aspect to be kept on the radar will be the issue size and the final listing market cap, below anything like The valuation of 10.7 lakh crore in the listing may make inclusion difficult. Besides, the interim market size segment will be an important level to watch for cut-off, Edelweiss said. Therefore, the notional inflow could be $280-500 million depending on the final listing.

IPOs that are significant in size and meet all MSCI inclusion criteria may be considered for inclusion in a standard index, outside of an initial inclusion, index review.

If the decision to incorporate the IPO is made early, the inclusion is effective after the end of the tenth day of trading of the security. However, in some cases, another date of inclusion may be selected to reduce turnover, for example, where the normal inclusion date is closer to the effective date of the next index review.

We believe that the FTSE Index should not be included prior to the September 22 review. Also, we do not see the stock entering the Sensex and Nifty 50 indices in the near future as the norms for those indices are more stringent,” Edelweiss said.