14 Jun 07 How to apply in an IPO
This post is based on the request of one of the regular readers of this blog. For the past 2 – 3 years there has been a huge bull rally in the indian stock markets which has brought people back to investing in the stock market. A fallout of this capital market bull rally is the tremendous increase in the activity taking place in the primary market (IPO market). Companies are rushing in to tap the capital markets and raise funds through Initial Public Offers (IPO) and Follow onpublic offers (FPO). Though paper work has been considerably reduced, the process of applying in an IPO is still little complicated for people not familiar with investing in the stock market. Here are simple steps to start investing in stock market and IPO’s (primary market)
There are two ways to invest in IPO’s
Online mode
Offline mode
Investing in IPO’s online (through the internet)
This is the simpler of the two methods. To get started in investing in IPO’s you will need to open a demat account cum trading account (To do this you will need a bank account and a PAN number). After opening your demat and trading accounts you will need to login through your trading account and select the IPO you wish to invest in. Transfer funds from your bank account to your trading account. Select the number of shares you want to apply for and the price at which you want to bid for (or use cut off option). If you get the shares allotment, the shares will be credited to your demat account. The IPO refund will be sent by cheque to your postal address or through ECS to your bank account.
Investing in IPO’s offline
Here you will need only the demat account. Trading account is not necessary unless you decide to sell the shares you have been allotted through IPO’s. You will have to visit your nearest broker and get the IPO application form, fill it up and give the filled form along with the cheque to the broker. You will be given an acknowledgement form. If you apply for more than Rs. 50,000 you will need to attach a photocopy of your PAN card with the IPO application form.
Online or offline : Which method should I choose?
It depends. Online mode is more convenient and saves time, effort maybe money too (if you consider fuel cost). But you won’t be able to give a stop payment if you decide to change your mind after applying. If you are doubtful about investing in an IPO, its always better to use the offline mode to invest in that IPO.
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You said that one can issue a issue a stop payment for physical bids submission.
Is it legal?
@ Abhay – I’m not sure as to whether it is legal or not, but I know a few people who have done it and managed to get away with it.
Thanks for the above provided information.
Please let us know how to apply at cut-off price for an IPO. The application form do not have any option for such application.
I want to share my experience as a new investor that more than one application through one and the same demat account makes all the applications liable to be rejected on the grounds of “duplicate beneficiary account” as such applications are considered as multiple bids. This knowledge becomes more relevant in IPOs offering more than one payment options like part and full payment for e.g. as recently offered in DLF and ICICI IPOs. It is thus advisable that only one application be made and that can be through part payment mode for long term investors and through full payment mode for listing gain purpose.
Regards.
Akkbatra.
when we dont get allotment then after how many day we can claim for interest ?
Is it after 30 day ?
And to whom should we registered complaint ?
@elixir – We don’t have to claim. The company automatically pays interest if it exceeds the deadline set by SEBI. So far I have not come across any company which exceeded this limit.
Can a single benificiary apply for an IPO through different demat A/Cs with different DPs?
I have a demat account. Can I fill multiple forms in my name for same demat account if i wish to invest in an IPO.
How to make sure that we can get the IPO allotted if it is overbidded multiple times?
All IPO Application not selected .My question is in which method they r select our IPO application?
hi
i m a B.E. STUDENT.i m interestd in share market.i dont have much knowledge about it. but i am very much eager to know and invest in it. so guide me that what initials i should follow and precautions to be taken. i m interested in reliance power.i want 20 shares of it. can i get it or not??
what procedure i should follow??
I want to open D mat accounts
can i negotiate with broker when buy shares?