Facts about Initial Public Offering (IPO) you should know

Apart from this i would also like to share some information

IPO in India

Cities like Ahmedabad, Kolkata and Rajkot are the most active centres for the IPO (initial public offerings). Trades done in the grey market are settled on the day of listing. Once the deal is done at a stipulated price, the seller must deliver the shares after he has been allotted the shares by the company. If the seller falls short in receiving the exact number of shares that he has sold in anticipation, then he must buy the shares on the market (once the share is listed) to honour his commitment. Most of the recently-concluded initial public offerings are quoting at a significant premium in the grey market, compared to their issue prices; this means that the issues are perceived to have been underpriced.

Many traders short sell in the grey market if they feel that the premium on offer is unwarranted and that the stock may list at a price lower than what most market players expect it to. Though grey-market operators say that there is a constant change in the grey-market premium, it largely depends on the subscripttion on the last day and the market conditions, post issue closing. Example: Grey market premium for the Roman Tarmat issue went up from Rs 28–30 to Rs 110–140. This was because the issue was subscribed around 30 times eventually, after receiving a lukewarm response from investors during the first two days when it was open for subscripttion. Though illegal, the grey market continues to thrive. Investors who bid for an issue normally do not get the full quantity because of the limits for each class.

This has resulted in many people "selling" their IPO applications to the grey market operators for a secured interest. Many investors earn a fixed amount—anywhere between Rs 2,500 and Rs 4,000 by selling their IPO applications to grey-market operators in Ahmedabad. Though many IPOs are yet to open for subscripttion, investors may need to look at more than the prospectus when subscribing to IPOs. Street-smart investors would rather look at indicators from the booming grey market before taking a call on IPO investments. It is not only market-savvy investors from Gujarat, but also lead managers of IPOs from Mumbai, Delhi and other parts of the country, who look at Ahmedabad's grey-market premium rates as an indicator of the price at which the issue is likely to get listed.

Good Keep Sharing....

Very useful Information

Thanks lakshmi

Factors To Consider Before Investing In IPO’s.

IPO’s or initial public offering is best understood as the first public offering of shares by a private limited company before listing in a stock market. Looking down IPO’s history of success and failure stories, you would be smart to first fully understand the various aspects behind such offerings and makes the right choice to invest or not in IPO’s. It is advisable to understand that investing in IPO’s could prove risky with unfavorable market situations and sentiments and when the fundamentals of the company and industry are weak. It is best to go by facts, avoid being influenced by rumors and have a closer look at the past performances also.

https://www.holisticinvestment.in/before-investing-in-ipo

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Ramalingam K, MBA, CFP,                                                                                  

Director and Chief Financial Planner,

Holistic Investment Planners

“Best Performing Financial Advisor Award” Winners from CNBC TV18

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