How to invest in an IPO

An IPO is a sale of shares to the public by a private company for the first time. Investing in an IPO has become very simple with the emergence of online bidding, and a complimentary rise of online payment solutions. Investing in IPOs can be very profitable if you make sound choices based on analysis of the company’s prospects. This article is a guide on how you can invest in an IPO.

Key Points:

  1. In India, you can invest in IPOs both online and offline. However, you require a demat account to conduct transactions in IPO shares.
  2. Online payments for bids IPOs are conducted through the ASBA (Application Supported by Blocked Amount) process wherein banks set aside the bid amount from your trading account.
  3. Shares allotted to you are directly deposited into your demat account and refunds are credited to your bank account.

In India, you can buy shares either online or offline. Much of the bidding happens online as offline bidding is becoming obsolete, if it hasn’t already.

The process

  • You need to have a demat account to buy shares.
  • A demat account is opened by Upstox for every user.
  • Confirm that the IPO is open to you, the retail investor.
  • If you are bidding online, visit the website of the bank offering the IPO.
  • You must be a client of the bank to bid for shares.
  • Login into your net banking account and find the link to apply for IPO shares.
  • Enter in the 16 digit Depository participant ID provided to you by Upstox and bid for the amount of shares you want to buy. Fill in details as required and submit application.
  • The bank sets aside the money for the bid through ASBA (Application Supported by Blocked Amount) system. You can’t access the blocked amount which is transferred to the company after it allots you shares or is refunded back after the IPO closes if shares aren’t allotted to you.
  • After the shares are allotted, they are automatically deposited in your demat account.
  • You can view shares you hold in the holdings section of Upstox Pro mobile and Web trading platforms.

If you really must go old school, you can bid offline this way:

  • Visit a participating bank.
  • Fill in application form.
  • You can use the 16 digit Depository participant ID provided by Upstox.
  • Attach cheque for amount of bid.
  • Shares will be deposited in your Upstox demat account.
  • You can view shares you hold in the holdings section of Upstox Pro mobile and Web trading platforms.

Why you should stick to online investing

  • The investor gets to bid online in a hassle free manner. The bidding process is simple and takes only a few minutes to complete.
  • Shares are automatically deposited in your demat account and refunds are automatically credited to your bank account.
  • If you have an Upstox demat account, all your share holdings can be viewed at one place.
  • Upstox also offers free delivery trading, so you can buy and sell IPO shares at zero brokerage cost.
  • You can sell shares on the very first day of trading if shares open at a higher price and make a profit. This is called flipping.

If you don’t have an Upstox demat account, you can get started on their demat account opening page. For details of upcoming IPOs, check out NSE’s IPO listings.

Wrapping Up

  • An IPO is the act of sale of a company’s share to the general public for the first time.
  • Investing in IPOs can be a very profitable move if you pick the right companies.
  • To get started with an IPO, you need a demat account, and bid for the shares on the website of the bank offering the IPO.
  • Online bidding minimises hassle, it takes only a few minutes to complete and shares are automatically credited to your account.
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