Missed LIC IPO? Should you buy now or wait?

_{Data Source: NSE (# - CMP as on 19th May, 12.30 pm)}

In short, even the privileged LIC policyholders find themselves in the red despite the hefty discounts that they got, although their pain is a lot lesser. However, investors are curious by default and also need an alternate plan of action, or Plan B as we like to call it. Broadly, we can summarize the investor options as under.

•    Should existing investors stay invested in LIC?
•    Should existing investors average their position in LIC?
•    Should new investors start buying LIC at lower levels?
•    Should new investors wait for lower levels?

Here is what existing investors in LIC can do?

If you are already invested as a retail investor then you are about -5.42% worse than the issue price and if you are a policyholder you are just -3.82% worse than the issue price. That is not a real concern, especially since the markets have seen a sharp correction overall. In that context, LIC has held up fairly well. If you are already invested, you can just hold on.

What if the investor is looking to average. Normally averaging can be a double edged sword. For instance, if you bought LIC and it has gone down, then you were wrong in the first place. Averaging is like being wrong twice over. On a more serious note, you can look to average your position on dips. However, ensure that you do not end up with too much of insurance holdings in your portfolio. That is a basic litmus test.

What if you missed the LIC IPO; should you still give it a miss?

There are enough sceptics in the market predicting that LIC would also go the Paytm way. That would be naïve since they are two different ballgames altogether. In the US there was a popular belief that what was good for GM was good for America and vice versa. In a sense, what is good for India is good for LIC and ironically what is bad about India is also good for LIC. I mean, low insurance penetration is good for LIC.

If you are creating an India portfolio, then LIC has to be in that portfolio. Should you buy it now? You never know as nobody has consistently got their market timing right. A much better way would be to adopt a systematic SIP approach. Keep nibbling at the LIC stock on dips and keep adjusting your cost of holdings. It is important to get your skin in the game. There is no point in being an extremely proud bystander on the LIC stock.