IPO: What is the meaning of IPO? Understand the meaning of all the terms related to it..

IPO: What is the meaning of IPO? Understand the meaning of all the terms related to it.. Newspoint | 07/05/2025 23:39:15

The stock market is a complicated term in itself. The stock market is the place where the shares of companies are bought and sold. There are two major stock exchanges in India, NSE and BSE. The stock exchange is also called the secondary market.
Most of us are aware of this secondary market, but few people know about the primary market. The shares of a company travel a long way before entering the secondary market. To enter the stock market, the company first issues shares directly to the investors. This is called an IPO. Before launching an IPO, the company has to get approval from the market regulator SEBI.

What is an IPO?

An IPO is called an Initial Public Offering. Any company that launches its IPO to enter the stock market. These IPOs are launched in the primary market. It is launched based on a price band.

Price band

The price band is the range at which the company issues its IPO. At the time of allotment, shares are available at the price at which investors have placed the highest bid. To avoid oversubscription, you should bid at the highest price only.

Oversubscription

Oversubscription occurs when the number of applications for that IPO exceeds the number of shares available.

Lot size
If you want, you can buy any number of shares of any company from the stock exchange. But this does not happen in the primary market. In this, a minimum of one lot has to be taken. The size of this lot is decided by the company, but according to the current rules of SEBI, the value of one lot cannot exceed Rs 15,000. For example, a company has kept the lot size of 100 shares. The price of one of its IPOs or shares is Rs 150. So the investor will have to invest a minimum of Rs 15,000 in the IPO.

It is important to look at GMP.
GMP means the price of the IPO share in the Grey Market, it is estimated that the listing price of that share will also be the same. If the price in the grey market is high, then the listing will be at a premium, and if the price in the grey market is low, then the listing will be at a discount.

Listing
After the IPO process is completed, these shares enter the stock exchange. Here, their listing can be at a premium (i.e., higher than the issue price) or a discount (i.e. lower than the issue price). Listing means that these shares are now available for buying and selling in the stock exchange.

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