IPO

Sep/Topic/01

IPO

Initial Public Offerings (Primary Markets vs Secondary Markets) When a company issues stock for the first time, this is called an initial public offering, or IPO. The IPO is the signal event that a company has gone from private to public ownership. The funds are raised by companies here and it is raised on the primary market. In short, primary market is the place where companies raise money from the public via an IPO. IPOs can raise hundreds of crores of rupees for a company looking for cash to expand its operations. Some companies go public almost immediately, while others, such as TCS and more recently Just Dial, hold out for years in private ownership before finally going public. How does this affect the retail investor? Well you can make good money just upon listing on the day of the IPO. However, that makes sense only if you have a short term perspective. If the share being listed is good then it makes sense to participate in the IPO get some shares at a low price and the keep on buying the shares after it is listed also to reap good gains after a couple of years. Remember the IPO shares is called as Primary markets and when they list of the stock exchange then it means that they are now available in Secondary markets. So it is good to know the terms Primary Markets and Secondary Markets.