Looking to make a quick buck? Strong IPO listing offers no guarantee of sustained gains
Investors looking to wager on Initial Public Offerings (IPOs) to make a quick buck may be better off selling the newly- acquired shares in the issue soon after the listing. This is because the first-day pop does not ensure that such bets would continue to do well in the subsequent weeks.
Of the over 100 mainboard IPOs listed on the exchanges from January 2023 till date, shares of 22 companies were locked in the highest tradable limit (upper circuit) of between 5% and 20% on the listing day, according to Samco Securities. But over half of these stocks have not been able to maintain the bullish momentum over the next one month.
Out of the 18 companies listed for over a month, 11 fell between 0.4% and 40% in their first month of the listing (from the second day of debut), while eight returned between 7% and 90% in this period.
Analysts said investors in IPOs looking for short-term profits must mostly sell on the listing day.
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