New Delhi: With 54 per cent of IPO subscribers cash their holdings on listing day, indicating an interest in IPOs linked to listing gains, alone, said stock market expert Sharad Kohli, concurring with the findings of a SEBI report. Investors’ behaviour shows that they do not trust these companies in the long run and are in the IPO only for short-term gains.
To be sure, these stocks have their own set of buyers. A company’s IPO DRHP lists out the company’s plans among other fundamentals. It is important that investors go through this document to apprise themselves of the company’s fundamentals. Most IPO investors do not seem to go through this document. Otherwise, they would not have exited the company’s stockholding on listing day. It is also a bad idea to exit the company on listing day since one tends to miss out on larger future gains, said Kohli.
This is not a good trend since earlier, investors kept their shares intact for many years after receiving an IPO share allotment. The present-day ‘trading in IPOs’ may also be a result of the plethora of IPOs on offer today compared to earlier times, said Kohli.
What SEBI said in its report
SEBI in its report stated that individual investors sold 50.2 per cent shares allotted during IPOs within a week of the company’s listing. Non-institutional investors sold nearly 63.3 per cent of shares while retail investors sold 42.7 per cent shares. When seen in a yearly timely the number of allotted shares sold by individual investors climbed up to 70 per cent, according to the report.
In comparison, mutual funds sold 3.3 per cent of IPO shares allotted within a week. Banks sold a whopping 79.8 per cent of such shares within a week. These decisions were also guided by returns. If the returns exceeded 20 per cent within a week of listing nearly 67,6 per cent of shares were sold by individual investors. However, this figure declined to 23.3 per cent when the returns were in negative territory. The top 3 states in terms of IPO allocation for retail investors were 39.3 per cent in Gujarat, 13.5 per cent in Maharashtra, and 10.5 per cent in Rajasthan, according to the SEBI report.
Nearly 54 per cent of individual IPO investors sold their allotted shares within a week of listing, according a SEBI report. Here’s what experts have to say. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
