FREE Equity Delivery and MF
Flat ₹20/trade Intra-day/F&O
|
Zerodha (Flat Rs 20 Per Trade)
Invest brokerage-free Equity Delivery and Direct Mutual Funds (truly no brokerage). Pay flat Rs 20 per trade for Intra-day and F&O. Open Instant Account and start trading today.
Investment in the HNI category of IPO is a high-risk investment. An investor should have an understanding of risks and rewards when investing in this category.
Risks in applying in HNI Category
Most HNIs take IPO funding loans to invest in IPO. There are a few risks with this:
The IPO shares start trading in the market in 7 to 10 days. A lot can happen in those days. In case the market turns adverse in 10 days, you may incur huge losses on the listing day.
The shares in the NII category for HNIs are allotted by the lottery system if the number of lots applied is less than NII over-subscription. In this case, you may not get the allotment. Even if you get it, it will be just one lot.
HNIs with cash of 10-50 lakhs in their savings bank could apply with their funds. In this case, the risk is low but the chances of allotment are minimal too. Good IPO subscribes 300 to 1000 times in the NII category.
HNIs are not permitted to revise or cancel the bid once placed. Most HNI's apply at the last minute.
HNIs are not permitted to apply at the cut-off price. They have to place the bid at a fixed price in the give price band. The HNIs doesn't get any allotment if the bid price is less than the price fixed for the IPO shares.
HNIs take a calculated risk on IPO funding. They calculate and estimate how much subscriptions will be in the HNI category. They apply for 10 to 20 times higher lots than subscriptions with the funded amount.
Example:
Note in the above calculation, HNI has to estimate:
This is one of the key factors in calculating the grey market premium (GMP) of IPO shares.
Add a public comment...
FREE Intraday Trading (Eq, F&O)
Flat ₹20 Per Trade in F&O
|