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The IPO train: are you missing on the fun or is it a doomed ride, to begin with?

IPO has become the new fad for finance enthusiasts nowadays and for all good reasons indeed.

Some of the following highlights about the recent IPOs might even tempt you to hop on the investing train:

  • Indigo Paints gave an opening-day gain of 75% over its issue price of ₹1490.
  • Zomato made a bumper entry of 65% listing day gain.
  • Burger King made a debut with a 92% listing day gain over its issue.
  • Nykaa, a popular ecommerce brand gave 78% gains on its IPO. 

Pretty tempting right?

It’s no wonder that people (mostly youngsters) are flocking up towards investing in newly launched IPOs looking to make quick profits.

Some youngsters might even call it a specially cooked-up lottery ticket!

But of course, that’s not the case.

When it comes to professional traders though (we are talking about traders and investors like CA Rakesh Jhunjhunwala here), they share a mixed opinion regarding this.

When talking about the new-age IPOs (like Zomato, Nykaa, etc), Rakesh Jhunjhunwala has this to say (taken verbatim), “I don’t go there. This party (new age IPOs) will pop sometime”.

Being the great trader/investor that he is, it is certainly wise to heed his (Mr. Jhunjhunwala’s) words and analyze the reason for his caution against IPOs.

If you look at some more of these new-age IPOs, you would find that not all of these are money makers.

Take a look at SSFBL (Suryoday Small Finance Bank limited) which on its listing day gave its investors a loss of 44.6%.

Again, not all IPOs are gonna mint money for you. Some are definitely gonna take it back.

It is true with any kind of security that you can trade or invest in, be it IPOs, stocks, crypto, and so on.

Youngsters who are new to the market should especially exercise caution against gambling in the stock market. 

As the old market saying goes, “it would take you a loss of 50% to go from ₹100 to ₹50, but it will take a gain of 100% to go from ₹50 back to ₹100”

People, especially youngsters should strive to get an understanding of fundamental and technical analysis of stocks before putting their funds in the stock market. That is if they want to minimize their losses and make consistent profits.

Gain a better and deeper understanding of your moving stocks with technical analysis and price action, starting today!

Information sources:- https://www.chittorgarh.com/report/ipo-performance-report-listing-current-gain/17/

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