InvestorQ : How should investors go about selecting IPO for investing out of the large number of IPOs expected during the fiscal year?
prachi Patwardhan made post

How should investors go about selecting IPO for investing out of the large number of IPOs expected during the fiscal year?

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sara Kunju answered.
4 months ago
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There is no royal route to IPO investing, but you can apply two basic principles. Firstly, take a short term view and this may sound quite paradoxical in terms of equities, but let me explain. IPOs are in the midst a frenzy when they command rich valuations. Play IPOs for listing gains and then wait for a few quarterly numbers for affirmation. Also, too much demand means selling pressure from retail investors HNIs and QIBs. Focus on listing gains.

Rely on IPOs only to play novel themes in the market. For example, you can always get steel and chemical stocks in large numbers and with pedigree in the secondary market. There is not much an IPO can offer in such sectors. IPOs can add value in sectors like digital or niche pharma where supply is limited. Remember, when you invest in an IPO, there is always the risk of the unknown. As well play that risk on new-fangled sectors rather than on old breeds.

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