The world has changed a lot. Things that were not possible at one point, are possible now. All this credit goes to the development of technology. Buying shares of a company is a simple job. But the participation in these fields has always been promoted by the rich upper section of the society. Common people used to have an attendance of thinking that the stock market is basically for the rich people. Because they believe it is a gamble. The upper-class people can afford to lose, but they can’t. At present, participation in the stock market has increased. People from middle-class society have also penetrated the market. There are a few terms in the stock market like IPO, dividend, bonus, stock split, buy back, ex-date, special dividend, etc. Now people may ask about IPO and how to apply for ipo.
IPO stands for initial public offering. A company’s share is distributed, among its promoter and a few financial institutions. But if a company likes to earn more investment, the company sells its share in the stock market for the first time. This is called an initial public offering. You may be curious about the craze application of IPO. Let us highlight them in a meaningful format.
- Investment: In a stock market people usually performs three types of actions. They are an investment, hedging, and trading. We all know the application of investment. People usually invest an amount and gain the benefit upon maturity. The market growth of India has shown an average potential growth of 14% compounding annually. So if a person invests 100000 rupees with an expected growth rate of 14% for a term of 30 years, he will be expecting an amount of 51 lakh rupees. Do the investors tend to invest early in the IPO and receive a massive amount after retirement?
- Short-term gain: Stock market is famous for its short-term gains. Generally, if a standard company with a good financial background introduces its IPO in this stock market a person can gain easily a 15 to 20% return in a span of 30 to 40 days. On the other hand, if a company has high expectations with good financial sheets, it can gain 25 to 40% in a short time if it introduces an IPO. In simple terms, if a person invests 10 lakhs in an IPO and games 20%, he will receive 2 lakh rupees in a time of 30 to 40 days.
- Games from hedging: The game of hedging is played quite often in the stock market. Let us assume a company introduced its IPO with a brand value of 1000 rupee per unit. A person gets the idea of hedging the stock, so when its price increases, he will get a massive profit in return. It is generally observed that the price of a standard successful IPO becomes twice over 3 to 4 years. Successful hedger keeps the shares from the IPO and sells them after 3 to 4 years when their price doubles. On the other hand, if the IPO was unsuccessful, a hedger will buy the shares after the IPO, and resale them after humans when the price reaches its brand mark.
Conclusion
They say smart people win the race. Through the other points, we have come across the utilization and the application of IPO. After depending on a week many successful and unsuccessful IPOs were issued in the stock markets, such as Go Airlines IPO, LIC IPO, ZOMATO IPO, etc.