Is IPOs easy way of making money

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Hi,
Do you think if IPOs are an easy way to make money? One of my friends having demat account on his relatives name say he make 2% every 20 days without taking any huge risks. Advise from fund houses , looking at the over subscription level or even grey market premium makes it simple tool i feel. What do you think?

 

[suresh*]

Hi,
Do you think if IPOs are an easy way to make money? One of my friends having demat account on his relatives name say he make 2% every 20 days without taking any huge risks. Advise from fund houses , looking at the over subscription level or even grey market premium makes it simple tool i feel. What do you think?

What's an IPO?

 

[fire]

Ipo

IPO is initial public offer. Its a process of a company entering into the stock market by selling a percentage of the stocks to the public. Based on the valuation of the company by its auditors they will fix the price (or price range) of each stock. People can apply for it in particular dates fixed by SEBI for that company through their demat account. Based on the subscription level ( demand&supply) one will get the allotment. They will be listed in the stock market within 3 weeks . If its a good company and valuation is reasonable you would get a profit (called premium). One can sell on the listing day itself.Or they can hold it if they suppose/know the company will do well in the future.

For example TCS came to IPO some 3 years back. Its stock price was around 850.On listing day it went to 1050(approx) . Assume If one had got 20 stocks he would have made 20*200 in 20 days.Now the stock price is around 1000Rs after a stock split.
I heard in US Google's IPO price was 35$ .Now its 500$.

There are great stories about Bharti,Infy etc. But there are negative cases also.Its important to know more and track the market to minimize the risks. One has to follow many sites (moneycontrol.com,economictimes,thehindubusinessline.com,greymarket.co.in) and read financial books (Rich Dad,Poor dad will be a gud one to start with).
Good think about IPO is you can go to the National stock exchange site and see how much it is oversubscribed before applying for it. If it goes beyond 10 normally you wont incur loss.

You would get a lot of information in the internet . Google it,analyze your risk profile and try to invest according to it and knowledge you have gained.

Actually I wanted to create polls in the sites asking the forum members about various financial questions . I dont know if I can do it here.

I feel other financial experts in the forum can add more.

What's an IPO?

 

[Nacchinarkiniyan]

Way back in the 1970s Government of India brought asked the foreign companies to dilute their holding. A number of 100% foreign owned companies like ITC came out with IPOs. They were all oversubscribed. But people who got the allotment made a killing.

 

[kunjuppu]

It is like any other gamble

We are seeing increase in value because our economy is booming. But stock prices is cyclical. It is a easy way to make money if you buy low and sell high. Don't believe people's boast. They never tell you when they are losing money.

 

[N.R.Ranganathan]

Are IPOs.....

Sir,

It depends upon a host of factors. We must see the price band of the offer,
break-up value of the shares, future profit earning-capacity of the Company
coming out with IPOs, future prospects of the industry, global and local
political and economic situation, index-movements, opening price of the
shares etc. We must watch the price movements with eagle's eyes. It is
better to offload the shares when the prices move up.

Dealing in secondary market is a full time affair. One has to be in touch with
the market closely and intelligently buy and sell to make short term gains.