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Is IPO Application Worth Investing : Funds Block , Holding , First Day Gain 2024 etc

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IPO Investment in India has never been treated as a good investment because of lack of knowledge that people have regarding IPOs. In India , only limited people know how to judge movement or expected movement of a stock by its financials and technical analysis . Also, people are unaware of the fact that the all IPOs are listed on stock exchanges within few days and also provide listing gains to some special lucky investors . Those listing gains can be either  50% or 100% or upto 200% percent of the actual investment , depending on the financials of the company or its purposal for getting listed in the market .

IPO means Initial Public Offering which on basic note means that company want to issue its capital and want to raise funds from people by offering its capital share . By purchasing the offer of the company ,a person becomes an part owner in the company liked every equity holder becomes after buying shares of the company and it becomes the responsibility of the company to pay dividend or some return to the investor in the form of high market value of share .

If you are a new investor in the stock market , then following this post you will be able to understand how you can get short term gains by investing in an IPO listing company .

Profit and Returns in an IPO

For initial public offering some companies issue new set of shares for the public , this mean that companies would issue some part of their capital towards the public to raise some money for their plans . These shares once invested by the public are either listed on a high price in stock market or at low price some times due to some policies of the stock market , in case if they are listed on a high price the difference in the buy price and the listing price would be the profit for the investor and if they are delisted then the investor would be at loss.

For instance , if the price of the IPO share is Rs 600 and on the listing date the price becomes Rs 1000 then the investor would be at profit of Rs 400 per share on the listing date and if the share price is delisted at a rate of Rs 400 , then the investor would be at the loss of Rs 200 per share .

IPO Investment Process

In an IPO , you are accepting an offer which a company which is yet to list on stock exchange is offering you, in that offer the company would be offering you some shares in its equity at a particular price which might be listed on a price higher than the offer price or at a price lower than the offer price . To invest in an IPO ,  a investor has to first go through a process of research and analysis and then :

  1. Have to open a Demat Account to invest in those stocks open in IPO for allotment . A Demat account can be opened in any of the financial beneficiary account like Angel Broking or Zerodha or Upstox in India . To open a demat account , you need some KYC Documents which can be opened online without any charges . A demat account can be opened with any banking institution also.
  2. Once a demat account is opened , look for the IPO Section , in that application and click on invest.
  3. You’ll be required to fill in the BID Amount and the number of shares you want to invest in . The shares shall be provided in lot size .
  4. Once you place the bid amount , the next page will be opened of entering the UPI or banking information for payment , the payment shall be made through banking channel.
  5. The payment shall not be deducted from the bank account but it shall be put on hold aside and will be paid to the company once the allotment of the shares is approved by the company.

On the allotment day , the company shall allot the IPO shares and will debit the amount from the bank account . Once the amount is debited the shares on the listing day of the shares , shall be credited to your bank account .

Risk in Making an IPO Investment

There is a risk involved in each investment , and you got some risk in this investment too. But the possibility in an IPO investment for heavy risk is negligible as you might get a loss of few bucks only and your capital invested shall always be safe. The biggest advantage of buying equity through IPO investment is that you might not be able to buy shares of that company in lifetime at price which is offered you at the time of allotment . Once alloted the price shall either go up or down :

If the price go up –  Your invesment value will go up and you will earn decent amount per share .

If the IPO is delisted which means that it is listed on stock exchange at a price lower than your investment value , then you might get some loss on the listing day . There is no other risk associated with IPO .

First Day and Exit from Stock Holding

The best part of IPO investment is that you have to invest money in some equity at price which is the lifetime lowest of the company and your investment will always be more that what you have invested .

Secondly , once you receive the allotement , it is better if you don’t know about company financials and you can do analysis of the company to just sell the shares alloted on the same day of allotment and listing in the stock market .By selling for the first day gain , you shall be out of the risk bracket of stock market.

Hope , you understand how IPO Investment gains can benefit you in both short run and long run . If you have any queries related to investment or IPO you can place your feedback comments.

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