RBI's rate hike was the last obstacle LIC needed. But Twitter finds amusement in that too
RBI raised its key interest rates by 0.40% on the day LIC IPO was opened to the public. As investors got worried and stock markets slumped, Twitter took to memes to find some comic relief.
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The Reserve Bank of India (RBI), India's central bank, pulled a surprise move on May 4.
RBI increased the key interest rate by 0.40% in its efforts to tame inflation. This news immediately triggered a slump in the stock market. Both BSE and NSE fell by 1,400 points and 391 points respectively.
Why did the RBI do this? Well, the high crude oil prices, shortage of commodities globally and geopolitical tensions have impacted global inflation and raising interest rates is a classic inflation control measure.
RBI Governor Shaktikanta Das. Photo: Twitter
But why does it have to negatively impact the LIC IPO?
The RBI announced the rate hike on 4 May at at 2pm, the same day that LIC IPO opened for subscription to the public. Before the rate hike was announced, the common sentiment for the IPO was positive for all sectors (ie retail investors, mutual funds and international investors). But when the hike was announced, a certain section ie retail investors got disappointed because the RBI raising its interest rates was an indication that inflation was here to stay.
It was also an indication for the retail investors that they will now have to delay buying homes and cars, since investors with floating rate home loans will now have to pay more in EMIs. When an investors expects expenses to rise in the coming months, his desire to invest in an IPO will normally take a back seat.
LIC IPO. Photo : Getty Images
Though the IPO was 60% subscribed as on May 4, mostly by domestic mutual funds, this could have been a better figure had the retail investors not been disappointed.
Well, as of now it seems like both government entities, LIC and the RBI, have done their jobs but are not necessarily in sync with the timing of their actions. It seems like the actions of one is drastically impacting the other. Though disappointing, this has also triggered Twitter to come up with interesting memes on the whole situation.
Here are the best ones:
1. WHEN LIC CANNOT BELIEVE ITS EARS
We are sure LIC feels a bit disappointed. When you plan everything to the T, even delay your plans because of some international folks who started fighting, but on your big day, your own home grown brother messes your special day, it is quite a bummer.
LIC to RBI right now. pic.twitter.com/T3fGTdCg4d— Azhar.One97 (@zhr_jafri) May 4, 2022
2. RBI, LIC'S RESPONSIBLE DEVIL
This seems to be the most popular meme going around. The meme perfectly shows how Twitterati cannot believe how RBI can betray its own brother LIC?
LIC to RBI ???shared from stockmarket infomania pic.twitter.com/MKWMgfdXwB— Money Magnet (@MyMoney_Magnet) May 4, 2022
3. IT'S TIME TO ADDRESS THE DEVIL
When a betrayed brother (LIC) knows that the issue was caused by one of its own, they have to address it with the boss, ie. the RBI Governor.
4. MEANWHILE THE RBI GOVERNOR
People say make your big moves in silence. And that is exactly what the Governor did.
5. MEANWHILE, THE STOCK MAKET & THE INNOCENT INVESTORS
The retail investors are the ones who have to make tough calls. Many of them have had their eyes on the LIC IPO and the RBI rate hike will now lead them to think twice before investing a minimum of Rs 15,000 per lot.
6. HERE'S SOME MORE
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7. AND SOME MORE
There is nothing you can do when life throws you into situations which you have no clue about and are completely out of syllabus.
8. EVERYONE SWIMS AND SINKS TOGETHER
Here's the thing: Irrespective of whether you want to invest in LIC or not, when the market goes down, logic goes out. The only thing that can save someone from this downfall is your risk appetite, future planning and using some fail proof strategies.
Has this rate change impacted your decision to invest in the LIC IPO?