Initial Public Offering (IPO)

The process of issuing shares of a private firm to the public in a fresh stock issuance is known as an initial public offering (IPO)
An initial public offering (IPO) allows a firm to raise funds from the general public.

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What is Initial Public Offering (IPO)?

The process of issuing shares of a private firm to the public in a fresh stock issuance is known as an initial public offering (IPO). An initial public offering (IPO) allows a firm to raise funds from the general public. The move from a private to a public firm, which often involves a share premium for current private investors, can be a crucial opportunity for private investors to completely realise rewards from their investment. Meanwhile, public investors are allowed to participate in the offering.

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Is Investing in an IPO is Good?

When well-known or well-liked brands decide to become a publicly listed and owned entity, the media hype around the initial public offering (IPO) can sometimes entice individual investors.

An initial public offering (IPO) is a significant milestone because it implies that the firm has reached the point in its development where it can access the public market for funding to expand its operations. However, for many people, initial public offerings (IPOs) are a mistaken topic.

Keeping an eye on the IPO calendar and buying stock when a company goes public may appear to be a simple method to get in early as a potential shareholder. Positive media attention, on the other hand, may or may not indicate that an IPO is a good investment.

How to Apply for an IPO?

You may have heard terms like “IPO” (initial public offering) being open for a specific company and that you may apply right now. Typically, you have a three-day timeframe to apply for an IPO.

If you have a DEMAT account, you can apply for an IPO with any major bank, including ICICI, HDFC, SBI, and others. The application can also be completed online. You can purchase an IPO using your netbanking account.

Personally, I like the net banking form of applying because it is simple and hassle-free. For better tracking, I use money from my bank account for the application and then designate the amount as invested afterwards. 

Is IPO investing profitable?

Yes, it is profitable, in a nutshell. The lengthy answer is yes, if you invest in the appropriate IPO. You should not invest in every initial public offering (IPO) that comes along. This is why I’ve decided to start this segment.

On the second day of trading, I will examine each and every initial public offering (IPO) that has opened in the market (if I am not too busy to analyse on that day then I will on next day). That analysis will assist me in making my own decisions. I’ll decide whether or not to apply for an IPO based on that decision.

Let’s look at some statistics from previous IPOs in 2019 to see if they were profitable or not. You can then make your own conclusion based on that information.

Tips to Invest In an IPO:

The following are some helpful hints for investors.

  1. The investment window for an initial public offering (IPO) is three days.
  2. Never invest on the first or second day of the month.
  3. On the third day, you should invest.
  4. Only invest if your subscription is more than four times what it is now.
  5. You should invest in the third day’s afternoon.
  6. This time investment will allow you to gain a better understanding of your subscription status.
  7. If your subscription status has changed more than 10 times, you should only apply for more than one lot.
  8. If you just intend to invest for the purpose of listing gains, you should sell accordingly.
  9. You can only keep your position if you have faith in the Company as a long-term investment.

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Learn more about stocks

Our knowledge section has info to get you up to speed and keep you there.

What is Equity trading?

Traders can trade stocks on the equity market. Public and private stocks are available to investors. Unlike private stocks, which are traded privately, public stocks are traded on exchanges. When a company is formed, it is initially private before launching an IPO.

What is a dividend?

A dividend is a payment made by a corporation to its stockholders, usually out of its profits. Dividends are typically paid regularly (e.g., quarterly) and made as a fixed amount per share of stock—the more shares you own, the larger the total dividend payment you’ll receive.

What is Income Tax?

Income tax is a type of direct tax that a government imposes on its people’ earnings. The central government is required to collect this tax under the Income Tax Act of 1961. Every year in its Union Budget, the government can adjust the income slabs and tax rates.
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