The war between Russia and Ukraine has created a strange highly volatile environment and because of this, high volatility is being seen everywhere today be its global markets, inflation, then international oil prices! There is nothing special about the Indian market, but the market is constantly downtrend. In fact, many sectors are in ‘declining mode’ for fear of Russian sanctions.
But even in such a situation, the Government of India is determined to IPO of LIC. In fact, now there will be foreign direct investment in LIC as well. Let us see that if LIC’s IPO comes this month, will the effect of the Russia-Ukraine war be on IPO as well?
The effect of this war will be found on India as well as inflation will increase
The invasion of Ukraine is driving up oil prices and could pose a risk to India’s rising inflation. Well, since India imports 80% of oil – so as the price of oil increases, India’s balance sheet will also increase as the import billing will increase. And then India’s capital flow and external position will be bad.
Analysts estimate India’s current account deficit to rise to around $15bn if oil prices rise by even 10% – which will have a negative impact on the INR. After all, India is the third-largest importer of crude oil in the world.
In addition, crude oil-related products carry a weight of some 7.3% in the ‘Wholesale Price Inflation’ basket. So even if the oil price rises by 10%, there may be some 1% increase in the direct and indirect effects of wholesale price inflation.
Even for edible sunflower oil, India imports at par with Ukraine especially. India imports about 2 lakh tonnes of sunflower seed oil every month and sometimes it goes up to 3 lakh tonnes. Let me tell you if India imports 100 litres of sunflower oil then 70 litres comes from Ukraine, 20 litres from Russia, and 10 litres from Argentina Yes, 90% of India’s imported sunflower oil comes from Ukraine-Russia, so this war The effect will be available on India’s cooking oil.
And if NATO imposes sanctions on Russia’s oil products, then oil prices will increase even more
A 10% increase in crude oil will result in an increase of Rs 8 or 9 for every litre of petrol and diesel. And if this conflict happens then crude oil prices will also increase, petrol diesel will also increase, cooking oil will also increase and at the same time our energy bills will increase.
After the war, oil prices are expected to come down, but it is not known yet how long this war will last.
Now coming to LIC’s IPO
The government and the finance ministry are making every effort so that LIC IPO proves to be a successful IPO. The government has also allowed foreign direct investment in LIC up to 20%. The way is that foreign portfolio investors are also now standing in the LIC’s shares in the secondary market.
This is a very positive sign for investors India is finally trying to prove itself as an attractive investment destination, and LIC’s IPO is giving a great opportunity to global investors as well. And now foreign investment will come not only in LIC but also in other corporate bodies.
There are a lot of analysts and experts regarding the valuation of LIC and they do not mind that investors should stay away from LIC IPO, but if the financial record, profit, and historical record of LIC are seen, then this IPO is a golden opportunity especially. those shares are available at a discounted price for LIC policyholders.
So if you are a LIC policyholder, and you want to invest in LIC IPO, then link your PAN with your LIC policy today (today is the last date for linking). If you do not have a Demat account yet, then open your free Demat account with Angel One. Keep in mind that if you do not have a Demat account, you will not be able to invest in LIC IPO to be a LIC policyholder.
So, what are you waiting for, open your paperless Angel One Demat account today!
Happy Investing!