Lux Investing

I am a beginner in investing . how is an ipo allotted?

Public Comments

1. Dear, You say you have just entered the stock market. So, what you have selected for investment in IPO way, is good. Collect the application for the IPO you wanted to invest, and read it atleast 5-10 times to know about the comapny, its directors, their activity of business, the promoters and their share of investment, the financials for the last 3-years. Last but not the least, their type of risk involved in the busienss, what for the fund is raised ? The same may be enalysed with the financial newspapers or periodicals to have fair idea and are they matching with your investment. Never bother if you are not allotted the share. Try for other comapnies. Always invest for smaller lot and for lower amount, which is less risky. Once the share is allotted, if the investment return is good, sell atleast 50% of the shares allotted. The proceeds may be used for rotation. The profit may be keept in a Fixed deposit with a Nationalised Bank. Slowly you can enter the secondary market, derivatives etc., Best of luck.Happy investing.
2. You said, you are a biginner in investing. IPO are not the types of stocks you want to be in for somebody new to stock markets. You can start of by invest in stocks that you are very familiar with.
3. It depends on how "hot" the IPO is and how many shares are out there. Typically you have to be a client of one of the brokerage firms underwriting the offering. They are the ones that are actually financing the offering. If the IPO is for a really hot company or sector, and it's almost certain to go way up, those shares get allotted to the brokerage firm's very best customers. These are usually going to be institutional buyers like pension funds, mutual funds and hedge funds. A small amount of stock is available for the general public, but it's very hard to get in on a good one. If you are a small investor and your broker calls you up to tell you he can get you all the shares you want of an upcoming IPO - run for the hills, that means nobody else wants it. IPOs are considered speculative investments because there is no trading history for the stock, so if you're a new investor, you may get shut out of offerings for suitability reasons too.