Can we sell IPO shares immediately after allotment? What is the process of selling IPO shares immediately?
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- Updated On:22-Apr-2024
- Replies:5
Short Answer
In an Initial Public Offering (IPO) a company sells its shares to investors in order to raise money. As a retail investor, you can apply for an IPO from the primary market in order to get the shares offered by the company. Once the shares get listed on the secondary market, you can sell your shares provided you have received an allotment in the primary issue.
Detailed Answer
What is an IPO?
An IPO or Initial Public Offering is when an unlisted company gets listed on the Indian stock exchanges such as NSE (National Stock Exchange) and BSE (Bombay Stock Exchange). Historically, companies go public when they want to raise fresh capital for the company or when the existing shareholders want to sell their stake. Either way, retail investors have two ways to get shares in an IPO.
1. Pre IPO shares- Shares purchased before the IPO
2. Apply for the shares in the IPO.
The terms for selling in both these cases are different. Let’s look at if you could sell the IPO shares quickly.
Can we sell the IPO shares immediately?
As discussed earlier, there are two ways to obtain the shares of a company. It includes either buying it before the IPO through private placement companies or through ESOPS or applying in the primary market at the time of the IPO. Hence the answer to the question, “Can you sell the shares immediately?” is a Yes and No.
- If you have purchased or acquired the shares before the IPO, then there is a lock-in period of 1 year. You cannot sell your shares until the lock-in period of 1 year is removed. Hence, you cannot sell your shares on the date of listing.
- In the second case, if you apply for an IPO through the primary offer and receive the allotment. You are the owners of the shares. In such a case you can immediately sell your shares right from the moment the stock gets listed on the Indian stock exchange. There is no lock-in period for shares bought in an IPO.
Conclusion
As most retail investors get the shares through an IPO, the first scenario would not be relevant for the majority of investors. Therefore, Yes, you can sell your IPO shares immediately after the stock gets listed. There are no restrictions related to that.
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Discussion (5)
Yes, going to be interesting times with all the startups ipoing in near future !
An IPO, or initial public offering, is when a company makes its stock available for purchase by the general public for the first time. There are many benefits of investing in an IPO, but there are also risks involved. Therefore, if you are making a profit on the listing day, it is wise to close out 50% of your positions that day, with the remaining 50% being held for the future.
IPO or Initial Public Offering is a way through which a company raises capital by giving its shares to the public. A IPO after getting listed on the exchanges can be traded by investors. The shares can be sold directly on the day of the listing since the shares have already been allotted to the investors.
If you have applied for an IPO and received an allotment for the same, you can undoubtedly sell the shares on the date of listing. However, if the shares list at a premium (Above issue price), you can sell the majority of the shares at a profit and hold on to some of the remaining, for the long run. Whereas, if the IPO lists at a discount to the issue price, you can book the loss and look for a better opportunity to re-enter at a lower price.
An IPO or Initial Public Offering is where for the first time an earlier unlisted company sells new or existing securities and offers them to the public in the primary market.
IPOs have been extremely popular lately as a result of increased retail participation, ongoing bull run, and massive listing gain opportunities. However, the Indian stock markets went through a minor correction which resulted in a muted performance of some IPOs. The market negativity coupled with the lofty valuations of some of the IPOs led to poor listing gains, but the craze might not be over.
IPOs can be a good option for beginners as they provide an opportunity to get the shares of good companies at an attractive price. Though IPOs can provide good listing gains and quick profits, good companies can help you to create massive wealth in the long term.
Yes, you can apply for an IPO application under a minor or HUF's name, provided they have different PAN card numbers. Minors can open a Demat account with their parent’s PAN Card and bank account.
Contrary to popular belief, India has more stock exchanges than only the two most well-known, the NSE and BSE. There is no denying that these two stock exchanges dominate the Indian market, but according to SEBI, there are currently seven recognised stock exchanges in India.
The minimum and a maximum number of shares are defined in Lots in an IPO. The minimum number of Lots that a retail investor can apply in the Retail Segment (RII) is 1 Lot and the maximum number of Lots that can be applied should be less than 2 Lakh Rupees. On the other hand, if one wants to apply for more than 2 Lakh rupees then they can apply in the NII (Non-Institutional Investor) category where the minimum amount for investment is 2 lakhs and the maximum amount is not capped.
IPO prospectus is the document which gives information to the investors about the company statistics before they issue shares in public. It is mainly a 3 step process. For detailed description, read through the blog below.
There are many ways to check the IPO allotment status but Zerodha doesn't provide this facility on their website.** To check the allotment status you can visit the website of the registrar of the IPO**, for example, Link Intime, Karvy. With the help of a PAN number, you can easily check the status.
No, the application process for an IPO can be availed with zero brokerage fees. Applying in an IPO is free of cost and you don't have to bear a fee.
There are a number of stock brokers in India. Here we highlight two of the leading stock broking companies: Angel Broking vs Zerodha, a comparison to read.
aishwarya.frm.28
With the surge in start up scene in India, and many start ups getting listed, IPOs are in vogue now. They all come with a hype, so reports suggest that selling them once they come out in secondary market is a good way to make profits.