What is the Process of Selling IPO Shares?

What is an IPO?

An Initial Public Offering (IPO) indicates when the private company offers shares for trading in the public market for the first time. Once the company's shares are listed on the stock exchange, investors can trade them.

Whenever investors get a share allotment, the shares are credited directly into their Demat accounts. What investors decide to do next, to hold or to sell, is totally dependent upon their financial goals. In the meantime, experts recommend considering every factor before deciding to sell.

Things to Consider before Selling IPO Stock

How to Sell IPO Shares?

Once an investor has determined an exit from their IPO holding, there are different options available depending on personal objectives and the day’s market dynamics.

Sell on Listing Day

Market researchers and professionals generally observe many IPOs to see good performance on day one (listing day, relative to the following trading days. This often leads some investors to extract value by selling on listing day.

Investors should watch the pre-market session, which can be an early indication of what the opening prices are expected to be. For example, if pre-market prices indicate a 70-80% return, this should be an indicator of a buy price to sell.

Sale on Listing Day

A common strategy is to sell off only part of the allotment in order to recover the initial investment and hold the remainder for long-term gains.

For instance, Mr. A invested ₹30,000 by buying 150 shares at ₹200 each.

In such a case, the stock opening with a 40% gain on its listing price will be at ₹280. He can recover his entire investment by selling 108 shares at the higher price and keeping the remaining 42 shares for long-term appreciation.

Selling in Installments

Some investors like to sell shares over a period, usually quarterly, to coincide with the company's quarterly reports. Quarterly performances provide insights into future stock trends, helping to decide whether to sell or hold.

Partial Profit Booking

• This is a variant of installment selling:

• Sell 50% upfront to recover the initial investment.

• Sell the remaining 50% in five installments of 10% each, based on quarterly results.

• This usually works quite well with those companies that list at 40–50% gains.

When Should Investors Sell IPO Shares?

And naturally, the ideal time to sell varies widely among investors and depends on financial objectives. Investors should estimate the expected profit before selling and consider whether the exit aligns with long-term plans.

Many investors have historically favored selling on listing day, when prices peak, compared to months afterward. At the same time, there is no universally right time: what suits one investor may not suit another.

Key operational detail: On listing day, trading starts from 10:00 AM onwards, not from the usual 9:15 AM at the start of normal trading days. Again, investors must apply their chosen strategy at the right time to maximize gains.