Investors and traders are now witnessing the best time of Initial Public offerings. There are many companies who already doubled investors IPO investment this year and many more are about to hit the stock market in upcoming months. However, Many Investors remain confused about how to sell IPO shares. Let’s discuss the major strategies people use to sell their IPO shares.
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How to Sell IPO Shares?
Starting from Pre-orders to any business day on which stock market opens, You can sell your IPO shares without any issue. You just need to place an order in your brokerage app or you need to call your broker to sell the allotted shares.
However, you must understand the below strategies and process for answer of can i sell ipo on listing day shares?
Process of Selling IPO Shares in Pre-Opening
On the day of the IPO, the BSE and NSE permit an unique pre-trading session for IPO stocks (only first day of their trading). Orders can be submitted, changed, and cancelled during the pre-open session, which lasts 9 minutes (9:45 AM to 9:54 AM).
The following are the actions to selling IPO shares in the pre-open market on the day of the listing:
- Call your broker or go online to execute a sell order with the rate you want to sell at.
- Your stocks are sold at the listing price if the listing value is equivalent to or greater than the price you ordered to sell in pre-open.
- Your order will be cancelled if the listing price is less than your sell order price in the pre-open market.
Strategies for Selling IPO Shares
While we don’t have a crystal ball to predict an IPO stock’s future and exit properly, the following tips may be useful in certain situations.
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Selling All shares on Listing Day
Many experts and academics feel that an IPO performs better on the day of its initial public offering (IPO) than on subsequent trading days.
This reference is also dependent on when the stock is listed (end of the Bull Run). When compared against one, two, or even three year returns, listing day returns usually come out on top.
As a result, selling your shares on the first day of trading may be a good idea. The pre-market session before the firm is listed is useful advice.
Pre-market prices provide a very strong indication of where the stock is heading, and significant returns of 70% to 80% in pre-market are a good time to sell.
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Booking Part profit on listing day
This method allows you to pay your expenses while remaining invested in the event that the stock rises in value in the future. Assume you’ve been given 100 shares at a price of INR 200 each.
You’ve put in a total of INR 20,000. The starting price would be INR 266 if the share returns 33% on the first day of trading.
You can sell 75 of the 100 stocks to recoup your investment in certain situations. The remaining 25 stocks might be held for a longer amount of time for a basically sound stock from this point forward.
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Profit Booking according to the quarterly results
Another method you may use is to sell a small number of items at a time. After the quarterly earnings reports are out, you should be able to sell. This offers you four chances to sell in a year.
Divide the number of shares you’ve been given by eight if you’ve been given 200 for an IPO. For the following two years, sell 25 shares every three months.
Dollar cost averaging is the polar opposite of this. Rather than buying the same number of shares, you sell the same number of shares. In reality, your average selling cost for the following two years becomes the average share price.
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Selling IPO Shares in Installment
This method is similar to the instalment selling strategy, except instead of selling in equal instalments, you sell half of your inventory up front, paying the majority of your costs.
This technique may be highly beneficial if the company is listed at a healthy 40 percent to 50 percent gain. Selling during quarterly earnings releases is a fantastic period of potential once again.
After understanding how to sell IPO shares let’s check out other related things like ipo listing day trading rules:
Taxes on Selling
You must pay regular income tax on the profits if you sell the stock on the first day of its listing or at any time during the first year. If you want to take advantage of the lower capital gains tax rates, you must sell your shares after the first year.
Lock in Period
Lock in Period in IPO is usually placed for Anchor investors and Company management. If you are a retail investor, you need not to worry about lock in period. You can easily sell your shares on any day without any issue.
Retail investors who are also employees of that company can also sell their allotted shares without any issue. Lock in Period is not applicable on those employees who are not part of the management.
Trade to Trade Rules in IPO
There are some IPOs in which trade to trade rules are applicable which means you cannot do Intraday in those IPO on listing date. These are mainly those IPOs which are less than 250 crores of issue size.
This is a rule made by SEBI to save retail investors. However, this doesn’t restrict you from selling the shares on delivery basis but if you want to make money in Intraday that will be not possible in trade to trade IPOs.
Conclusion
Since the future is uncertain, an exit plan should always be in place with ipo listing day trading rules knowledge. The techniques listed above are an excellent point to start and may be adjusted to fit your specific needs. The most notable feature is to have a plan and a well-balanced portfolio.
This is all from our side regarding How to Sell IPO Shares. Although, if you have any doubts about ipo listing day trading rules you can just comment below.
Other Related Blogs to How to Sell IPO Shares:
FAQ About after ipo allotment when can i sell?
When can I sell IPO shares India?
You can sell your allotted IPO shares in India on listing day without any issues. However, if you wish you can hold them as much as you want and sell them on any business day on which the stock market is open.
When can we sell IPO shares on listing day?
Starting from Pre Open season of New listing which takes place at 9:45 to end of the trading at 3:30 PM you can sell your IPO shares anytime.
How to sell stock on listing day?
You need to place an order at your trading app or need to call your broker to sell stock on listing day. There is no lock-in period for retail investors. You can sell your allotted share anytime.
How to sell IPO shares on listing day
You need to place an order at your trading app or need to call your broker to sell stock on listing day. There is no lock-in period for retail investors. You can sell your allotted share anytime.
How to sell IPO shares in grey market?
There are no official persons or firms you may contact for IPO Grey Market trading because it is an over-the-counter marketplace. If you want to sell IPO shares in Grey Market, you'll need to identify a nearby dealer who can help you discover buyers or sellers.
