How to increase your chances of IPO allotment

 

Increasing your chances of getting an IPO allotment in India involves understanding the allotment process and following some key strategies. Here are some tips:

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1. Apply Through Multiple Demat Accounts

• Open multiple accounts: You can apply through the Demat accounts of family members (spouse, parents, siblings, etc.).
• One application per PAN: Ensure each application is linked to a different PAN, as multiple applications with the same PAN will be rejected.

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2. Bid for the Minimum Lot Size

• Retail quota: IPO allotments are done randomly within the retail investor quota, and every applicant who bids for the minimum lot size has an equal chance.
• Avoid higher bids: Bidding for more lots doesn’t guarantee allotment, as retail investors are allotted on a pro-rata basis if the IPO is oversubscribed.

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3. Apply in the Retail Investor Category

• Eligibility: If your investment amount is up to ₹2 lakhs, you can apply under the retail investor category, which has a specific quota.
• HNI (High Net-worth Individual) category: If you plan to invest more than ₹2 lakhs, you fall under the HNI category, which often has lower odds due to high oversubscription.

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4. Use UPI or ASBA for a Smooth Process

• ASBA (Applications Supported by Blocked Amount): Ensure you apply through ASBA via your bank or broker, as it blocks your funds rather than debiting them.
• UPI Mandate: If applying online, approve the UPI mandate quickly to ensure your application is processed.

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5. Choose the Right IPOs

• Oversubscription analysis: Look for IPOs with moderate oversubscription. Extremely oversubscribed IPOs may reduce your chances of allotment.
• Strong fundamentals: Focus on IPOs with strong fundamentals and demand in the market.

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6. Avoid Technical Rejections

• Double-check details: Ensure your PAN, Demat account number, and bank details are correctly entered.
• Sufficient funds: Ensure your account has sufficient funds to block the application amount.

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7. Apply Early

• Timing: Submit your IPO application on the first or second day of the issue period to avoid last-minute glitches.

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8. Apply Through Multiple Brokers

• Different intermediaries: Apply using different brokers or trading platforms to increase your chances, as technical rejections on one platform won’t affect other applications.

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9. Participate in Small & Mid-sized IPOs

• Higher chances: Smaller IPOs might have lower participation, increasing your chances of getting an allotment compared to large and popular ones.

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10. Check Grey Market Premium (GMP)

• Market sentiment: Look for IPOs with a moderate GMP. While high GMP IPOs attract more retail investors, they often result in oversubscription and lower allotment chances.

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By following these strategies, you can improve your odds, though it's essential to remember that IPO allotments are partly luck-based when demand is high.

Summary of "The Intelligent Investor" by Benjamin Graham

 

Concise summary of "The Intelligent Investor" by Benjamin Graham, often considered the bible of value investing:

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Key Themes:

1. Value Investing:
   The core principle is to invest in undervalued securities, which are priced lower than their intrinsic value. This approach minimizes risk and maximizes potential returns.

2. The Margin of Safety:
   Always leave room for error by buying investments at a significant discount to their estimated value. This acts as a buffer against uncertainties.

3. Mr. Market Analogy:
   Graham personifies the stock market as "Mr. Market," a moody character who offers you prices that might be irrationally high or low. Your job is to make rational decisions without getting influenced by his emotions.

4. Types of Investors:

   • Defensive Investor: Focuses on a passive, low-risk approach, prioritizing capital preservation. Prefers diversified portfolios and blue-chip stocks.
   • Enterprising Investor: Willing to take higher risks to achieve higher returns by researching and identifying undervalued stocks or market opportunities.

5. Investing vs. Speculating:
   Investors aim for steady, long-term returns based on analysis, while speculators chase quick profits and take on excessive risk.

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Key Concepts:

1. Intrinsic Value:
   The true value of a stock, based on fundamental analysis, such as earnings, dividends, and growth potential.

2. Market Fluctuations:
   Volatility is normal. A disciplined investor focuses on the intrinsic value rather than daily price changes.

3. Diversification:
   Spread investments across different asset classes or industries to reduce risk.

4. Dividend Policy:
   Companies with consistent dividend-paying records are a good sign of financial stability and shareholder focus.

5. Common Stock Selection:
   Look for strong financials, a track record of growth, and reasonable valuation metrics like low P/E (price-to-earnings) ratios.

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Practical Advice for Investors:

1. Defensive Investors:

   • Invest in low-cost index funds or ETFs.
   • Focus on well-established, dividend-paying companies.
   • Avoid frequent trading to minimize costs.

2. Enterprising Investors:

   • Conduct thorough research on individual stocks or bonds.
   • Look for overlooked or undervalued stocks.
   • Stay disciplined and avoid emotional decisions.

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Timeless Lessons:

• Patience is Key: Successful investing is a long-term game. Resist the urge to chase trends or time the market.
• Avoid Herd Mentality: Independent thinking is crucial. Don’t follow the crowd blindly.
• Risk Management: Never expose yourself to catastrophic losses.

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"The Intelligent Investor" emphasizes that success in investing comes not from luck or speculation but from rational analysis, discipline, and emotional control.