27 Apr 07 Eight Tips for Retail Investors for applying in IPO for Listing Gains
I have been very active in the IPO market for the past 5 years. In these 5 years, I have applied in well over 100 IPO’s. Of these I have booked a small loss of Rs.1 per share in only 1 IPO - Indian Bank
I have been getting a lot of enquiries from retail investors who apply in IPO’s for the purpose of listing gains. A lot of them have been making listing losses by applying in the wrong IPO and/or by following wrong strategies. Hence, I thought I should share some tips which I have been following to make “investing in IPO’s” profitable for retail investors.
The truth is, investing in IPO is an easy, low-risk way to make an average of 2-3% in 20 days. A 2 -3% return can seem very low on a nominal basis, but when you calculate the annualised return it becomes very attractive. You can make an annualised return of about 30%, ona an average, easily by investing in quality IPO’s by following the guidelines mentioned below. Infact I have made an annualised return of over 125% in a few IPO’s like the Sun TV IPO, Parsavnath IPO, Infoedge IPO (naukri.com IPO) and a few others. Now tell me which other investment class with similar risk reward structure will give you as much returns.
Here are eight guidelines that should be followed by retail investors to select the IPO’s to invest in and make sure the risk involved is minimum and at the same time ensuring chances of allotment are very high.
These tips are applicable only to those investing in IPO’s for listing gains
Tip - 1 : How do you select which IPO’s to invest in? Do research and a detailed fundamental analysis of the company? Read third party research reports? Listen to rumours, tips and gossip? Well, If you have been doing this in the past, I would suggest that you stop doing this immediately. Trust me on this - Its of no use. As a small investor, you will never get access to all the information you need to do your own analysis of the IPO. Don’t read third party research reports either because most of them would have a conflict of interest. Investment banks and brokerage firms through their reports might try to push the IPO’s of their clients and ensure that they retain getting that company’s business in the future. Magazines and newspaper reports can be biased and vested interests can be involved.
You would by now be wondering how else you could select IPO’s. Here is a simple secret. Blindly invest in a particular IPO, if the institutional category is oversubscribed by over 5 times. Institutional investors have access to information that retail investor will never have access to. This sometimes involves even insider information. So, just leverage on their analysis.
Tip - 2 : Always invest at cut-off price. The “cut off ” feature is an excellent facility that is offered only to retail investors. Make sure you make use of this facility.
Tip - 3 : Make sure you apply for the maximum shares possible that a retail investor is eligible to applyfor (Rs. 1 lakh limit). If you apply for the minimum shares its like throwing darts on a dart board. Most probably you will not get allotment and you would just end up locking your money for 20 days.
Tip - 4 : If you find 3 or 4 IPO’s which are good but have only 1 lakh of capital to invest, select the best IPO among the 3 and invest in it. Don’t split your money. You might end up not getting allotment in any of the IPO. Diversifying doesn’t work in IPO’s
Note - The next tip might seem unethical. So all of you out there who are very particular about ethics, kindly do not read the fifth tip. Further, It is just my personal opinion and I don’t endorse or recommend the following tip. It has worked for me in the past, but it might not work in future. I would take no legal liability / responsibility if you choose to follow the next tip and you get into trouble.
Tip - 5 : Many people would think this is not ethical but I do. I always apply for an IPO through a cheque. Once the final subscription figures are released and if I find that either the institutional investor category has been subscribed less than 5 times or if I find that the retail investor category has received much higher response than the institutional investor category (increases the chances of a bad listing, since most retail investors would sell on listing and there would be a huge selling pressure on the day of listing) or if I find to my dismay that the IPO has been oversubscribed by more than 50 times or so, then I would go ahead and give a stop payment.
As mentioned already, I’m not endorsing or recommending the previous tip. Its just my personal strategy / opinion.
Tip - 6 : If you want to invest more than 1 lakh in a particular IPO, invest in more than 1 application. Never invest more than 1 lakh per application. You can invest in your spouse’s name or your mom/dad’s name
Tip - 7 : Update your ECS details and make sure you write the following in bold and very clearly in the IPO application form.
1) Your name
2) Your DP details
If your name or DP number is incorrect or unclear, then you will face unnecessary delays in getting the shares alloted and you wouldn’t be able to sell on listing. Also make sure you opt for ECS refund. Cheques can be lost or delayed and lazybones like me would take over 1 month to deposit a cheque in the bank. ECS is hassle free and safe.
Tip - 8 : Sell of the shares alloted to you on the day of listing. Sell 50% between 9.55 and 10 AM and the rest in the afternoon. The shares of that particular IPO might do well in day 2 and day 3 and in subsequent weeks too, but I have seen an equivalent number of IPO’s which have witnessed a huge fall in the second and third day after listing. You have invested in the IPO for listing gains, so make sure you sell it off as soon as the company lists on the stock exchange. This way you will be exposed to the least amount of risk.
Well, That’s about it. If you feel I have left out any point, please do feel free to add it as a comment. Hope these tips would be of use to the readers of this blog. If you find them useful and want to buy me lunch 
or if you want to simply send me feedback you can mail me at info@bullishindian.com
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Its a nice tip
Thanks
Yoy are welcome, Abhijit
Thanks a lot…..Will sure give u a lunch when i recoverr my losses.
Hi,
yr.eight tips for retail investors are really very useful.You doing a great favour to retail investors by providing such a useful informations.Keep it up.Kindly share yr.views on ICRA Limited as i want to buy more share of ICRA Ltd.I am already having 750/-Shares Of ICRA Ltd.purchased at an average of RS.711/-.
Kindly share yr.views on ICRA Ltd.Yr.promt advice will be highly appreciated.With Best Wishes,Nilesh Desai.
Dear Bullishindian,
Excellent Tips for ipo!
Great!
Such tips are not available from even experts by paying thounds of rupees fees!
I also invest in quality ipos.I have earned considerably.
I read comments of experts from different sites and magazines and then decide whether to apply or not.I also enquire about premium in grey market.
You advise that one should sell on listing but I have incurred a great loss in my profit by selling on 1st day.Some glaring examples are tech mahindra,pyramid saimira,atlanta,aia,icra,educomp solutions,idea,action construction,dcb etc
How can u say that listing will be bad if retail oversubscription is huge?On the contrary selling will be more if allotment is liberal as allotees would like to book profit so that their money is not blocked.
When ipos are bunched together,I have experienced that sometimes it is better to go for 2nd or 3rd best ipo which increases possibility of allotment and returns.
There is nothing unethical or illegal in making stop payment.
I would like to have your valuable advice for these shares whether to hold or sell-idea,mindtree,icra,ace,pfc,tanla,fsl,cinemax.
I would certainly buy you a lunch for providing me with such valuable guidence
I would also like to have your E mail address so that I can communicate with you in future.
Thanks again.
good- keep it up
Hello Ashok, You have raised some interesting points. I’ll discuss and provide my opinion on each of them, one by one.
Comments obtained from different websites and magazines are ok, only to a certain extent. You can get a basic idea from them, but you need to make your decisons independently and not based on what they recommend. Having a few journalist and investment banking friends, I can say for sure that…what the big brokerage firms, magazines and investment banks recommend are biased. They surely won’t want to give “do not apply” recomendation to IPO’s of their clients or future clients.
I advise selling on listing because that involves the minimum risk. If you don’t sell at listing, you are exposed to market risks, just like any of the other publicly traded stocks are. I would split it up into two transactions. Say the IPO issue price of a company A is Rs.100 and it lists at 125 and moves to 150 say 1 month after listing. Now we need to split it up into 2 transactions to analyse both legs separately.
1) Bought A at 100 in IPO and sold at 125 on listing day
2) Bought A at 125 on listing day and sold at 150, 1 month later
Now trasaction 1 is the actual IPO transaction. This is where you can make money with almost no risk. Transaction 2 is a regular short term investment transaction which is exposed to normal market risks. From 125 the stock can also fall below 100 in a week or so. So 150 is not guaranteed.
An empirical analysis has been done by a leading business school in India and it has identified that IPO’s are generally over-priced and at listing the stock is tremendously overpriced. However after listing, The stock reaches its fair price after 6 months of listing. So as an IPO investor I would like to profit from this market mis-pricing in leg 1, which involves least risk. But the leg 2 is a normal investment decision which has its own risks and rewards. Tech mahindra and atlanta did well, not because the IPO listing price was cheap (underpriced). They did well because their performance after listing was good. Results were good. they got new orders and so on. That can happen with any of the over 5000 listed stocks and this has its own risks involved. If the performance of the company is bad, stocks might actually fall. Parsavnath, RPL are some of the examples
Regarding the “listing will be bad if retail oversubscription is huge” point, I started explaining it here, but In midway i found out that I need 2-3 pages for explaining it with examples and stuff. I’ll probably do a separate post on this or we can discuss this over the phone. But, here is the gist
If retail investors category recieves high oversubscription, it doesnt mean people will buy it on listing, in the secondary market, because they didn’t get shares alloted. Basically, most retail investors invest only for listing gains and they’ll just move on to another IPO instead of buying the shares on listing.
But if institutional investors category gets a high oversubscription, they will definitely buy on listing fron the secondary market because they are investing in the company for a long term. Hence, the stock will have a good listing.
Based on these 2 points, you would like to have a high institutional oversubscription and a low retail oversubscription.
If it happens the other way round, its a double whammy for you. You will get lower allotment as well as a lower listing price.
I have found based on my experience that its better to select the best IPO and apply maximum in that IPO, instead of spreading the funds in many IPO’s. Since, you think like I do and feel that giving stop payment is not unethical, the best way is to apply in all IPO’s and then look at the final over subscription figures and go only for the 1 which has highest institutional oversubscription coupled with moderat/low retail oversubscription and give stop payment for the other IPO’s. However this is my personal opinion. If you have applied and found that spreading the funds in various IPO’s is giving you better results, then i find no reason as to why you should not continue doing that in future.
Hold mindtree and ICRA, if prices move down buy more and average. I dont really track the other counters you have mentioned.
You can feel free to contact me at info@bullishindian.com
Hello Nilesh, 750 ICRA shares is a huge investment. ICRA appears little high on the valuations front. However it has a very good future especially after BASEL - II norms are implemented for banks in India. It already has a huge order books when it comes to grading IPO’s. There are only four recognised credit rating agencies in India
CRISIL
ICRA
CARE (and)
Fitch India
Among these, ICRA is the number 2 credit rating agency and I personally feel it is a very good investment for the medium to long term.
Excellent article I have been applying in IPo s for last 1-2 yrs ,U r absolutely correct in Ur article IPO s should be sold on first day .It is definitely proved except few like TechMahindra or ICRA .Recntly I have formulated strategy of selling and taking out the amount I invested rest the prifit amount is kept as Shares in Portfolio stocks
What do you say about MINDTREE and ICRA since both these stocks were more then doubled after listing day.
thanks for sharing valuble inforamation….
i am new to all these things….
abt “Tip 5: Stop Payment”….. what are the consequences of “Stop Payment”…..i just hope no leagle action wud be taken by any entity…..
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You said if the IPO got oversubscribed by 50 times u will stop payment…
Y? this will increase the value of the stocks know? cud u clarify on this?
Hello Gladiator, If the IPO is oversubscribed by more than 50 times, then it is highly likely that you won’t get any allotment and you will end up having your money struck for about a month or so. Hence I give stop payment and deploy those funds in an alternative investment opportunity.
hi …could u tell me whether its worth investing in Binani cements…is it a good bet for listing gains???
I want to know whether can v apply for a IPO with out a DP account..I want to apply for MIC ..but at present i dont have an DP account and came to know that it will take minimum one week of time to get the account activated.
And wanted to know how to apply with a cheque..for that I need to apply physcially ? or I can apply directly thru online and send the cheque thru courier..
In that case (applying thru cheque) if i need to fill the form physiclally …y I need to have a DP account? Im planning to open shortly? can i tell that in the form?
do help me ASAP….
Yes you can apply. But it involves some risk.
You can apply by writing a wrong DP client ID (but write the correct DP ID and DP Name)
If you are alloted shares (based on the IPO oversubscription), the shares will be withheld by the registrar and the reason mentioned would be Name / client ID mismatch. By then you will have your DP account opened. You just have to fax the registrar the stamped application reciept along with the client master form, which you will get as soon as your new DP account is opened.
The downside is, depending on the efficiency of the registrar this process may take anywhere between 1 and 3 weeks to be completed, by which time the shares of MIC electronics will already be listed.
i stays at peripherals not on district place ,so how can possible the cheque payment . Coz it takes 10-15 days to deposit money.
Help ASAP
Hi bullishindian!
I had got 203 FORTIS shares @ 108 through IPO alotment.
I had plans to sell 103 shares for anything above 148 and keep the rest for long term.
But it listed below issue price.
What do you say now, shall i keep them or sell them at loss?
if i want to get a littelbit of profit then upto what time (short duration) i have to wait?
Secondly what is your opinion on BINANI cement.
I am having around 68000 of loose cash with me. shall i apply for 800 binani shares or shall i try to get some established shares already in the market
148?!! There is now way an IPO which got subscribed by less than 3 times, can list at such a huge premium. The IPO valuations were unjustifiable, but Fortis healthcare looks good for the long term.
Instead of Binani Cement, I suggest you try Insectisides India IPO. But, wait till the last day and apply the strategies mentioned in this post and then decide which IPO to invest in. Good luck to you
As mentioned by you in your first tip only that Blindly invest in a particular IPO, if the institutional category is oversubscribed by over 5 times.
I would like to know that how will you come to know institutional subscription on the first day of start of subscription?
I request your feedback on this matter as I am being a great fan of bullishindian.com and always follow this site before investing in any stocks.
Please do the needful and thanks in advance for that
Thanks & regards
Nilesh
Dear Nilesh,
Thanks for your support and kind words. Regarding your query, it isnt possible for you to know the institutional subscription on the first day itself. You need to wait till the final day of the IPO. The IPO market is open till 5. If you check at 2 or 3, you will get the oversubscription details. If at that point the instititional subscription crosses 5 times, then go ahead and invest. If it has not yet crossed 5 and if you feel it is likely to cross 5 by close, then you can apply by cheque and give a stop payment if it doesn’t cross 5. Hope this helps.
Regards,
Bullish Indian
I want to know where can I get the updated information on oversubscription on an IPO time to time.
The information will be listed aound 7 PM on nseindia.com…but wat in case of other times? like in mornings..
[...] Comments Gladiator on Eight Tips for Retail Investors for applying in IPO for Listing GainsBullish Indian on Eight Tips for Retail Investors for applying in IPO for Listing GainsNilesh on [...]
@ Gladiator - BSE website shows bookbuilding LIVE. You can use that service
Really found such a worthfull article thats its diffcult to discribe. I have one query.
Actually i have very little money so i usually trade with that and ont invest in IPO,s.
Now time technoplast IPO is coming. I wish to buy it at opening at sell it later the day. I,m planning to buy 1000 and sell it later so i thin i can make heavy profit using this. The reason i am choosing this ipo is bcoz institutional oversubscription is 70 times wheras retail is 13 times. So acc to you even if retail book profit theinstituonal will keep and on the same day it will rise atleast 100 rs thats what i think after seeing gud IPO,s like MIC and nitin fire this week who also had the same subscritption. But i,m a little tensed with it also. So i think i shud put a stoploss but dont know how much shud i put. Bcoz like MIC drifted 10 points after listing and then went up..So if i put a stop loss of say 20 rs it might get hit and i,ll be in loss.
So kindly reply me. (Willing to take a risk as i guess it will go very high as instituonla is 70 oversubscription).
Great information on IPO’s although i already know most of the stuff….never thought of the stop payment option..:) thanks man
Mr. BullishIndian,
Why do you say you will give stop payment request if the IPO is oversubscribed by over 50 times. Whats you funda behind it ?
listing date of time technoplast of isue
@Sensex - You are most welcome
@Srinivas - If the IPO gets oversubscribed by more than 50 times, retail usually gets oversubscribed by more than 30 times. I’ve personally never received allotment in such cases. Chances of allotment are very low and hence its better to give stop payment and apply in a different IPO or look out for an alternate investment.
Bullish u didnt reply my query.
Kindly read it above.
@Saurabh - Though I know a few people using this strategy, I haven’t tried it personally. Hence I can’t recommend it. I an understand your dilemma of using the stop loss. There is usually high volatility when new issues list on the stock markets for the first time. Hence there is a very real possibility that your stop loss may get triggered and then the stock might hit new highs. But if you don’t keep a stop loss, you risk loosing a lot of money. Its your take. Personally i find it a bit risky. However I find that on many cases if you buy at the end of the first day and sell it on the third day of listing, you are likely to make profits. This is because on the first day, those who bought for listing gains sell off their holdings. So from the second day there will be very little selling pressure. This is just my observation and I’m not gonna recommend this strategy to the readers of this blog.
Hi.
Ur correct but accoring to you selling is more when it is more subscribed in retail.
But if u see time technoplats its higly subscribed in instituional investment and not retail.
So selling pressures wont be there.Correct me if i am wrong. I was a silent spectator in all the ipo,s like icra,mic,nitin fire n all so may trade this time. But ya i cant put a stop loss for reasons mentioned. Do correct about my views.
Hi BullishIndian,
Its really great advise, I do appreciate a lot for , however I would like to know when we are subscribing IPO through online using sharekhan or HDFCSEC, How can we use cheque facility there as the option is itelf unavailable. So I think for it, we shall try from the street broker. Is that right?
Yes, you are right. If retail is subscribed heavily and institutional category is not heavily subscribed then the following will happen
1) There would be selling pressure on the listing date. (reason explained in the later part)
2) There would be low allotment for retail investors
Typically we would want institutional investors getting only 5-10% allotment of what they applied for. This will make them buy the remaining quantity from the secondary market after listing. If institutional category is not heavily subscribed, then institutional investors would have got 50% - 75% of what they applied for and hence wouldn’t buy on listing.
On the other hand not many retail investors would buy on the listing date, even if they didn’t get any allotment because most of them apply only for listing gains.
Comin back to time technoplast, you are right…there would be low selling pressure on listing. However, if it lists at a very high price, then the valuations won’t justify a purchase at that level. So institutional investors who are very sensitive to valuations won’t enter at those high levels. So, there wouldn’t be much buying support as well. Hence it is very important that you make sure you enter at a reasonable price.
@ limbuwala - Thanks for your kind words. Yes, to apply through heque you need to fill up the physical application form. These forms are available with sharekhan and HDFC Sec as well. However, you will have to go to their office and fill the application form manually. If you apply online, you can’t use cheques.
Well 1st of all, thaks for posting this article ,,as i found it quite true n helpful.
Im sure it must have fetched you great returns,
i just wanted to make my self more clear on your 5th tip,,which u said might be unethical for some popel,,for me its ethical though,,i would take your side in this one,,
you said that if the shares r over subscribed 50 times,,you wud stop the payment,,
can u just brief me a little more on that ,,
im thinkin of applyin for VISHAL RETAL Ltd IPO due till the 13th of july,,do you hav any say on that.
Thanks for your kind words Pratik. I’ve found that I never get allotment if the IPO is subscribed heavily. I would rather give stop payment and invest in a different IPO rather than locking up funds for 20 - 25 days. Yes even I’m planning to apply for the vishal retail IPO. You can find my latest post on vishal retail IPO on the homepage.
Thanks for ur very valubale replies. I must appreciate the way you replied my each and every doubt. Actually can u tell that what would be the very high price which you talked about so thats if it lists near that i,ll not trade on it. Bcoz i cant rwally judge it. But i think that it might list around 475.
Thanks.
@ Saurabh - You are most welcome. Congrats, you were spot on with your prediction on the time technoplast listing price. Unfortunately, I haven’t done a complete fundamental ananlysis on time technoplast and hence would not be able to comment on the right valuation. I had applied in the time technoplast IPO for listing gains and I have booked profits this morning.
Hello Bullish Indian,
Thanks for sharing the tips with retail investor community. It gives me an understanding that one can create wealth using the right strategy. Though, I agree with almost all your points including stop payment strategy. However, I am concerned that the over subscription details will be inflated and vague if too many retail investors start stopping payments on cheques. This will certainly defeat the purpose. Secondly, I do not agree to sell a share on the listing day to maintain a decent growth rate on your capital. I follow simple strategy which is as follows:
A. If stock LISTS with 50% - 100% of premium:
1. Hold on 1st day.
2. If your investment corpus allows, buy the share
2. If delivery volumes are reported to be good the next day you can put a buy or hold for couple of days.
B. If stock LISTS with premium >100%
1. No rules apply; it is a sure shot SELL.
C. If stock lists with 50% and breaches 100%, it is almost certain that it will coll off and will come down in subsequent sessions. Sell your holding and cover at a fair price later.
Best Regards,
Vikas Jain
@Vikas - Really interesting views. Would be glad if you can tell us the sucess rate you’ve had using these 3 rules. Thanks for sharing
@ Vikas - Yeh that is the downside of using stop payment. If lot of people follow this technique, then there would be chaos. However if such a situation arises I’m sure there would be action taken to prevent this practice. Until then I guess we are free to use it.
pl refer to your Message/Response no 22 regarding subscription figures of institutional investors.
How can we know the subscription fig of all category i.e QIB, NII and RII at 2 pm on the closing day because this information is updated on NSE site at 7pm and before that only cumulative figures can be seen.
Thanks
Yes, you are right Raj. An estimation of the institutional subscription can be made using the 1 o clock or 2 o clock data. Once you estimate the retail subscription it becomes easy to estimate the institutional subscription
retail subscription = number of shares applied at cut off (approx)
Institutional Subscription = approx 0.75% of estimated non retail subscription
By using the above formula you get a rough estimate of institutional subscription. If it croses 5 times or is likely to cross 5 times apply thro cheque. If final figures dont match your estimates give stop payment. If institutional subscription crosses 5 times on the previous day itself then no need to apply thro cheque. One can apply online itself.
Thanks for the reply but can you explain the formula with an example : say for DLF today.
It’s not clear to me.
Thanks
Hi Bullish Indian,
Its an excellent article… you deserve a great lunch and ofcourse with some cocktail too ;).
I have a question on applying for IPO in part payment. If i have applied for an IPO AAA for 1000 quantity using part payment option, and if i get allocated all the shares, what happens if i dont pay the remaining amount?
To be specific, if i dont want full quantity since the stock is that good, what is your view on this?
Thanks,
AJ
I have a question on applying for IPO in part payment. i have applied for DLF IPO for 180 quantity using part payment option, and if i get allocated all the shares, what happens if i dont pay the remaining amount?.. I paid Rs27000 as a part payment. So, how many shares will i get approx..(as retail investment was not oversubscribed/)..
Thanks
Murali
@Raj - Was busy on 14th. So couldn’t explain using the DLF IPO. I will do it using some other IPO.
@AJ and Murali - Thank you. I would prefer a Vodka based cocktail
If you use the part payment option and don’t pay the remaining amount you will be left holding the partly paid shares until you pay the remaining amount. The company may also forfeit your shares and you will end up losing the money that you already paid.
You won’t get lower allocation if you don’t pay the remaining amout. You will get the same amount of shares either ways (ie) if you pay the remaining amount or if you don’t pay. The only difference is you won’t be able to sell the shares until you pay the balance amount.
bullish indian, This ‘eight tips for listing gains’ article is great, they probably ought to give you an award for this. Very unselfish also, because if i were you, i would find it hard to give so much of information away for free.I have a few questions for you about the stock market in general,but they might require research.
1.what determines and more importantly who determines the price at which a particular ipo should list on the market.are subscription rates feeded into the computer to calculate listing price. surely,the listing price is not determined by premium and heresay in the grey market. why do some ipo’s list with a 100 rs difference between nse and bse.
2.Why do stocks close at a particular price on a day and open the next day at a different price. the bse i think, does not have after hours trading so, why should the price change.
3.on any given day,say at 9 am i want to know the total number of buy and sell orders that have peen placed on a particular stock either at bse or nse,where can i get this information accurately.since after hours trading is done at nse,the numbers would be continously changing.( the logic behind this is that if there are more buy orders then the stock would open on a higher price).
Any help will be greatly appreciated. thanks.
@ Rocky - Glad you liked the article. I can judge from your questions that you ar a newbie to stocks and stock market. I’d be glad to answer your questions since I had similar doubts when i started off (about 7 years ago)
1) We (investors) determine the price at which a stock lists on the stock market after its IPO. Its based on demand and supply. If the demand is high the stock lists at a very premium. If there is no demand then the stock lists at a discount. The listing price is the price at which the first trade takes place. Hence there could be significant difference between the listing price in NSE and BSE. But within 1 - 2 mins prices get aligned because of the “concept of arbitrage”.
2) Neither the BSE nor NSE have after hours trading. When the market closes the order book becomes zero. The price on the next day is different because a lot of factors both micreconomic and macroeconomic could have changed when the markets were close for trading. EX: If NASDAQ closes up, then Indian IT stocks usually open gap up next morning.
After hours trading is a facility provided by brokerage firms where your orders get stored in the servers of the brokerage firm and then when the markets open get transferred to NSE/BSE servers.
3) At 9pm, the total number of buy and sell orders that have peen placed on a particular stock would be zero since the market is closed for trading. First orders come in at 9.55 AM when market opens. Don’t confuse after hours trading with NSE / BSE order book. Each broker has his own after hour trading book and these orders would be placed only after 9.55 am when the stock markets open.
Since your questions are very basic, I suggest you attend some workshop or read some good book on “investing in the stock market”. This will let you get an insight on the stock market basics.
Pl answer my query regarding Demat Accounts for
applying in IPO:
I have one Demat A/C in my name.
If I open a 2nd Joint Demat A/c, in which my Father is 1st holder and I become 2nd holder and the residential address is same for both the accounts.
Can I apply in a same IPO for more then Rs 50k from the two Demat A/Cs. Will they consider both the applications or reject one.
Awaiting an early reply.
Thanks.
hey bullish indian, thanks a lot for clearing that out. I am afraid i was under a wrong impression about after hours trading. it was that silly guy from sharekhan who told me this.As for books, i have just started “how to invest in shares” by tejinder singh. The first page says that if an invester were to invest Rs ten thousand, in wipro in 1980, it would have been worth 200 crores in 2007. Thanks again but i might come up with more questions later.
Hi Raj,
Yes you can apply in one IPO using your account and another application using the account in which you are a joint holder (2nd Holder) with your father. In second case the tax implication will fall on your father’s assessment, if any.
Best Regards,
Vikas Jain
Hi Bullish Indian,
Glad to see your comments on my post. Unfortunately I have not tracked percentage wise growth in IPOs. But this strategy can be explained with almost 90% of the IPOs.
1.Mindtree
2.Tech Mahendra
3.Tantia Constructions
4.Voltmap
5.Educomp
Above issues are to name a few.I am hoping to do some indepth study over this weekend and get back to you.
Best Regards,
Vikas Jain
@ Raj - As Vikas pointed out, the only requirement for not being categorised as multiple applications is that the first/sole holder’s name should be different. Second/Third holder is not considered.
@rocky - I’m glad you’ve started reading books right away. Apart from Wipro, Infosys and Reliance also would have given very high returns if bought at IPO and held till now.
@Vikas - Interesting. I would love to have a look at your findings. This would probably let me and the readers of this blog know the best time to sell the shares alloted in an IPO.
What is your opinion regarding Roman Tarmant IPO
as it is likely to be subscribed by more then 5 times in QIB category by tomorrow. Now Should a retail investor apply or not?
Regards.
@ Raj - You can find my opinion on the Roman Tarmat IPO here
http://www.bullishindian.com/roman-tarmat-limited-ipo-oversubscribed-apply-for-listing-gains/353/
Hey Bullish Buddy,
Thanks for your great tips… I was thinking applying for DLF and vishal by sharing the amount.. but after reading ur advice i only applied in vishal (175 shares)insted of applying on sharing basis.. and i got 25 shares.. one of My frnd shared his amount and applied in both,, and he missed vishal.. no allotment to him.. thanks dude for ur tips..
Hi Bullish,
You analysis for the “Eight Tips for Retail Investors for applying in IPO for Listing Gains” is great.
Eventhough I am trading from the past 3 years, I didn’t know some tips. This article will greatly help for the retails investors.
Keep on updating this kind of articles.
@ Vikash & Bullish
Hi, Can you please share the view of Vikas’s 3 rules by example (holding shares instead of selling it on first day) … If possible, take a example of Vikas…
Hi BullishIndian,
Your Eight tips for retail investors are really fantastic.Hats off to you.
Could you please post your comments on whether to hold or sell Suntv. I bought it at Rs:437.
What future is there in this stock.
Thanks in advance
Regards,
Mechanical
@ Bullish,
Excellent tips.I added it to my favourite webpages.
Me and some friends had been doing this practice of stopping payment for ipo’s which get oversubscribed by more than 60 times after our broker recommended it to us. I guess if too many people start doing it, SEBI will do something about it.Meanwhile lets make hay while the sun shines
Anyways i appreciate your willingness to give out this information to people. Hats off to you.
nice tips by bullish. Market has gone down heavily today. Whatwill be the fat of forth coming IPOs? how will be the market behave on monday?
Reg tip 1
you say ,apply if institutional category is oversubscribed ,it does not work always , there are some cases ,where people made loss …akruthi nirman is one such ipo …..
why ,even some real estate cos too
so ,you cannot generalise like that .
they will try to fool all here
moreover not all FIIS are genuine ,promoters too route such investments via subaccounts
so ,better rely on fundamentals only .dont look at the FII or HNI subscription .it will mislead sometimes ………
cheers
@kumar - I can’t remember any IPO where the institutional investor category has been oversubscribed by more than 5 times and people made losses by selling on the listing date.
Two points are important here
1) Institutional investor category should be oversubscribed by more than 5 times atleast (higher the better)
2) This applies only for people looking for listing gains. (Should sell of at market open on the date of listing of the IPO)
Fundamental analysis is more for making long term investment decisions. Supply / Demand and market sentiments at the time of listing have much more impact in determining the IPO listing gains rather than fundamental strenghts / weakness of the company going public.
My 2 cents
Cheers
@Anup - Thanks for your kind words. You are right. If the majority of the investors start following this method SEBI will have to step in. Even in the case of IT People FPO, the same thing happened. Lots of investors gave stop payment and market grapevine has it that from a subscription of 0.97 at IPO closing day, the subscription fell below 0.90 (cut off) because many people gave stop payment. Hence the IT People FPO had to be withdrawn.
what about motilal oswal a appllied for maximum
Dear Bullish India,
Your methodology is excellent and has a very clear reasoning behind it. I would like to ask u a question. I had applied for Kouton IPO however the cheque bounced back as the money got transferred into the account after the cheque was dishonoured. In such a case what should I do.
Hi
thank you for valuable suggestion if possible give ur e mail id so we can communicate in future
Hi,
Found this article very informative. I have a question regarding oversubscription of IPOs. If an IPO gets subscribed say 10 times over, does this mean that I will not be alloted any shares for this IPO ? Is there any way of calculating whether one gets shares alloted depending upon the number of time an IPO gets subscribed ??
thanks !
Hi bullish,
Any input on the Reliance Power IPO ?
cheers
Hi,
Can you please share your valuable advice on the future of future of “Relience Power IPO” after the 21st market crash.
Thanks
Khan
Bullish
precision pipes oversubcribed by 5 times if QIB but listed belo. why?
Regards
Rajeev