Many investors sell their IPO stocks on the first day to enjoy the luring returns because past trends reveal that these returns may not last longer. More than 100 mainboard IPOs were listed between January 2023 and September 2024 (till the 20th), out of which 22 companies have touched the upper circuit limit of 5% to 20% on the listing day. But around 50% of these stocks’ returns have turned red in the next month.
In the last one-month period, 18 companies were listed. 11 stocks fell between 0.4% and 40% in the first month of listing from the second day of listing.
Who are the gainers and losers in one month? RBZ Jewellers was the biggest gainer in the 1-month return post-listing day of 89.68% while Vibhor Steel Tubes was the biggest loser at 39.64% negative returns in the first month.
Recently listed Orient Technologies, Bajaj Housing Finance, and Tolins Tyres have also experienced a fall in returns post-listing day with prolific returns generated on the listing day.
So, what’s the way out for long-term investors? They can set a trailing stop loss at the previous day’s high price. If the shares fall below that point, then they would automatically exit. Otherwise, rather than through the IPO route, they can wait for six months to invest. Over time, all the selling pressure would end and true valuation would arise with the end of anchor lock-in. Then, you can analyze two quarterly results of a company and make a decision to invest.
So, give it a thought and make your decision to hold or sell IPO stocks after listing wisely.
Reference:
https://economictimes.indiatimes.com/markets/ipos/fpos/looking-to-make-a-quick-buck-strong-ipo-listing-offers-no-guarantee-of-sustained-gains/articleshow/113581980.cms?from=mdr
