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Do You Know About The Ipo?

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By Author: Rahul Rai
Total Articles: 15
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In India, now everyone is becoming a part of the stock market. It can be equity, commodity or forex market. All according to their interest. share market advisory company help the people to invest in it. If you can understand the behavior of the stock market no doubt, you’ll be really successful.

Here, this blog is about IPO. We can't predict the stock market accurately. In the beginning, it works normally but after a moment abnormal momentum happens. Analyzing the market is also a task for the traders.

If one has informational, technical and valuable knowledge of the share market then he can easily trade in the share market.

You can trade via two methods as Primary market & Secondary Market using share market advisory tips and your knowledge.

Traders invest in the share market through IPOs is the primary market.
The traders who use listed shares to trade are Secondary markets.

Let’s discuss IPO deeply.

The process of trading starts from an open market where the public is waiting for the list of shares. In this process, general people can buy shares of the companies that are offered in the primary market.

In this process, the funds are collected by the company which is used to improve the health of the company. In return, people get the chance to buy the ownership of that company. A company can launch IPO shares as many times.

Why did the company launch an IPO?

For growth:

The first reason which kicks out the companies to launch the shares in the public market is the company’s growth. When a company wants to set its venture in other cities IPO helps the company to reach new people who can help to run and manage the company.

They can also take a loan for the expansion but after some time they have to pay an extra amount in the form of interest. So they choose IPO as their alternative.

IPO is a way that is beneficial to both the investor who becomes the owner of the offered shares and the company that offers the share in the primary market.

To pay dues:

If a company has an amount to pay then it takes the way of IPO to pay and sustain in the field. Because if they took a loan from the bank the situation would remain the same as before.

To promote own services/products:

To approach new people or to make connections with new people the company takes the way of IPO to make a network of people so their company can get the big exposure.

Due to the distinct pricing options, the two kinds of IPO’s are present in the trading world.

Fix Price IPO

The company and bank come together for a meeting and to decide the price of IPO shares and the investor can subscribe from that fixed price. After meeting shares are available to the public. And anyone can take the ownership in the company’s shares

Book building IPO

In this also, To set the price band of IPO the company set their meeting with the investment bank. When the price band is available and released before the public or investors. A bid is subscribed by the investor for that price band. Less IPO price is known as Floor Price and high IPO price known as CAP price. The difference between the CAP price and FLOOR price should be 20%

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