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What is intraday trading?
Closing an investment position before the market closes on the same trading day is called intraday trading. Day traders try to take advantage of the regular price fluctuations of a security and earn profits by opening trade positions according to the trend. Intraday trades involve high risks and reqRead more
Closing an investment position before the market closes on the same trading day is called intraday trading. Day traders try to take advantage of the regular price fluctuations of a security and earn profits by opening trade positions according to the trend. Intraday trades involve high risks and require you to have a good amount of experience trading in the market. You do not get the delivery of the shares in day trading and hence, get to save on the delivery charges imposed by brokers.
See lessWho decides the listing price of an IPO?
The offer price of a share is the price at which the shares were purchased in the IPO process. Once the shares are listed on the stock exchange, the company goes public. The opening price at which the share debuted on the stock market is known as the IPO listing price. While the underwriting investmRead more
The offer price of a share is the price at which the shares were purchased in the IPO process. Once the shares are listed on the stock exchange, the company goes public. The opening price at which the share debuted on the stock market is known as the IPO listing price. While the underwriting investment bank decides the offer price based on a vast array of commercial and operational factors, they cannot control the IPO listing price.
How is the listed price decided? – Market sentiments play a critical role in deciding the listed price. The principle of demand and supply is the key here. If sufficient buzz had been created regarding the IPO and the demand from investors is high, then it is quite likely that the listed price will be higher than the offer price. In the case of under-subscription or low demand, the listed price may fall short of the offer price leading to a loss to investors.
See lessAre minors allowed to apply for an IPO?
Minors can apply for an IPO if they have an active demat account and a PAN card. There are more criteria that need to be fulfilled before filling an IPO application for a minor. These include: Linking the minor’s demat account with the parent or guardian’s trading account. Without this, the minor caRead more
Minors can apply for an IPO if they have an active demat account and a PAN card. There are more criteria that need to be fulfilled before filling an IPO application for a minor. These include:
Linking the minor’s demat account with the parent or guardian’s trading account. Without this, the minor can hold the shares (if allotted) but will not be able to trade them.
This account also needs to be linked to the minor’s bank account in which they are the primary holder.
Dual-KYC will need to be done to verify both the minor’s as well as the parent/guardian’s information.
In many cases, the parent/guardian’s PAN number will also be needed to complete the IPO application process.
Note: m.Stock does not provide provision to apply for IPO for minors.
See lessIs it possible to update of cancel an IPO application?
Yes, if you wish to cancel your IPO application then this can be done through the platform that you had placed the bid originally. Most platforms allow you to check your active applications, select them, and choose to cancel them. The amount blocked for the IPO cancellation will be released to yourRead more
Yes, if you wish to cancel your IPO application then this can be done through the platform that you had placed the bid originally. Most platforms allow you to check your active applications, select them, and choose to cancel them. The amount blocked for the IPO cancellation will be released to your bank within 2-3 working days after the allotment process is completed.
Similarly, you can also revise your IPO application in case you want to apply for more or less market lots than you had in your original application. Accordingly, you may need to add more money as part of the IPO purchase (if buying additional lots) or get back funds in your account after the allotment is done.
Do note: most platforms allow cancellation and revision of IPO applications between 10:00 AM and 4:30 PM on trading days. An IPO application cannot be withdrawn once the IPO closes for its subscription.
See lessIn an IPO what do 'Market Lot' and 'Minimum Order Quantity' stand for?
The market lot size in an IPO defines the number of shares a lot consists of. There is a maximum and a minimum IPO lot size that applicants can bid for. Usually, the minimum lot size does not exceed Rs. 15,000 while the maximum lot size stays under Rs. 2,00,000. This is calculated by multiplying theRead more
The market lot size in an IPO defines the number of shares a lot consists of. There is a maximum and a minimum IPO lot size that applicants can bid for. Usually, the minimum lot size does not exceed Rs. 15,000 while the maximum lot size stays under Rs. 2,00,000. This is calculated by multiplying the price of the IPO share by the number of shares in the lot. For example, if the price is Rs. 250 and the lot size is 50, then the value of the lot becomes Rs. 12,500.
Minimum Order Quantity (MOQ) stands for the minimum number of shares an investor needs to bid for. In the above example, one lot consists of 50 shares that makes 50 as the minimum order quantity. Bidding for less than the defined MOQ will disqualify your bid. Moreover, you can only apply for multiples of the MOQ. In the example considered, you will be able to apply for shares in multiples of 50 – 50, 100, 150, etc. Applying for 75 shares will not be possible
See lessAfter submitting the IPO application form, is there any information that needs to be retained?
These days, the IPO application process is quick, easy, and paperless. After filling out the IPO application form, you can pay the fee through any of the available digital-banking options such as UPI or net banking. Upon a successful IPO application form submission, you will get an application numbeRead more
These days, the IPO application process is quick, easy, and paperless. After filling out the IPO application form, you can pay the fee through any of the available digital-banking options such as UPI or net banking. Upon a successful IPO application form submission, you will get an application number and a message from your bank confirming the blocking of the payment amount. Keep this information saved to track the status of your application and to ensure (in the case of an unsuccessful bid) that the amount has returned to your account.
See lessHow many days is an IPO open for bidding?
Although there is no fixed period for this, there is a time frame for an IPO to be open for public bidding. SEBI rules state that this period needs to be a minimum of three working days and a maximum of ten. The company issuing the IPO can decide on any number within this range. In exceptional casesRead more
Although there is no fixed period for this, there is a time frame for an IPO to be open for public bidding. SEBI rules state that this period needs to be a minimum of three working days and a maximum of ten. The company issuing the IPO can decide on any number within this range. In exceptional cases, such as a price band revision, the period may be extended as long as it stays within the cap of ten working days.
See lessCan you apply for an IPO without having a PAN number?
No, as per SEBI regulations, a PAN number is compulsory to apply for an IPO as it contains all the relevant information that is necessary to verify the identity and eligibility of the applicant and prevent cases of fraud.
No, as per SEBI regulations, a PAN number is compulsory to apply for an IPO as it contains all the relevant information that is necessary to verify the identity and eligibility of the applicant and prevent cases of fraud.
See lessWhat are the key milestones in the life cycle of an IPO?
Generally, the life cycle of an IPO consists of the following stages:- Identifying and employing an Investment Banker to prepare the company for the IPO process, determine the amount to be raised, establish the offer price, and create an underwriting agreement. Conducting a due diligence exercise thRead more
Generally, the life cycle of an IPO consists of the following stages:-
Identifying and employing an Investment Banker to prepare the company for the IPO process, determine the amount to be raised, establish the offer price, and create an underwriting agreement.
See lessConducting a due diligence exercise that includes investigating and verifying the accuracy of the company’s financial and other information. This is a holistic activity that covers financial reports, regulatory compliances, legal structure, etc.
Drafting the IPO prospectus – also known as the Draft Red Herring Prospectus (DRHP). This document contains all the relevant information about the IPO offering and the company’s history, business model, growth plans, operations, performance, financials, strengths, and risks, etc.
Seeking approval from SEBI by submitting the DRHP and declaring the intention to take the company public.
Organising roadshows to generate excitement and buzz in the investor community regarding the future prospects of the company and its upcoming IPO and drive the price and subscription of the offer.
Setting the price of the IPO using the fixed price or the book-binding method. At the end of this stage, the company determines the cut-off price, which is the final price at which the issue will be sold.
Allocating shares based on successful bids and determining the number of shares that are to be allotted to each bidder.
Listing the shares on the stock exchange completes the IPO life cycle.
What are the risks associated with an IPO application?
It is a well-known fact that trading shares comes with its own set of risks, and the same is the case with IPOs. It is important to know these risks so that your trading decisions are aligned with your goals and risk tolerance. Here are some of the main risk factors in applying for an IPO: The firstRead more
It is a well-known fact that trading shares comes with its own set of risks, and the same is the case with IPOs. It is important to know these risks so that your trading decisions are aligned with your goals and risk tolerance. Here are some of the main risk factors in applying for an IPO:
The first risk is that you may or may not be allotted the shares. Filing a successful application does not guarantee the allocation of shares. Furthermore, you be allotted shares but lesser than what you had applied for. However, in such a case, the balance amount is unblocked and released back to your account.
See lessOvervaluation is another risk in applying for an IPO. In this case, the share may list at a higher price than its actual intrinsic value. While this can be beneficial in the short term, once a market correction happens, the price can go down significantly reducing the value of your holdings.
Poor demand or a cold response to the IPO may mean the share debuts on the stock market at a price lower than what you paid for it, leading to an immediate loss for you.
Since the company issuing the IPO is not public yet, the information available on it is mainly through its website and draft red herring prospectus. Both of which, may not provide the holistic data that is needed before investing in a company.