Big LIC IPO impact on stock market is almost sure, provided Modi government achieves this target

LIC IPO: The Life Insurance Corporation (LIC) IPO (Initial Public Offer) will come after in 2021 but if we go by the Zee Business exclusive report, the Narendra Modi Government has targeted to open 1 crore new Demat Accounts by this LIC IPO launch date. If the Modi Government manages to achieve its target it will have a huge positive impact on the stock market because currently there is only 4.5 crore Demat Account in India. If the 1 crore Demat Accounts are opened by the LIC IPO launch, the total number of Demat Account will shoot up by more than 22 per cent.

Push from LIC policy holders

Actually, the Narendra Modi Government is mulling to reserve 10 per cent of the LIC shares for around 25 crore LIC policy holders. Indicating about this central government's move Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said that the way retail investors get 10 per cent reservation in the government company's IPO, the GoI is mulling to give that benefit to the LIC Policy holders too.

LIC IPO Impact on Stock Market

On what will be the benefit of these new Demat Account opening, Sumeet Bagadia, Executive Director at Choice Broking said, "One big benefit is that these 1 crore new Demat accounts will increase the percentage involvement of Indians in the stock market. If even 10 per cent of these new Demat Account holders become active post-account opening, it will help government get revenue through STT (Security Transaction Tax) on each share bought and sold in those 10 lakh Demat Accounts."

Bagadia also said that LIC has a strong face value and trust quotient among Indians. So, apart from the 25 crore LIC policy holders, some more new Demat Account can be expected to get opened due to the LIC IPO as it's mandatory to have a Demat Account to apply for the IPO.

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As per some recent media reports, the Narendra Modi Government plans to raise Rs 90,000 crore by selling six to seven per cent stake in LIC.  LIC's value is around Rs 12.85-15 lakh crore, making it India's second most valued company after Reliance Industries Limited (RIL), ahead of marquee names such as HDFC Bank, TCS, Infosys and HUL.

So, if the Narendra Modi Government managed to achieve its target of opening 1 crore additional Demat Account through the LIC IPO launch, the stock market of India may witness the above mentioned positive changes within the FY 2021-22.