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How to Buy IPO Stock : Application Process for Investing in IPO

November 11 2021 | Reading Time: 3 minutes
An initial public offering (IPO) is a way for firms to raise money from the public. For a variety of reasons, businesses require capital. They may need money to grow their capacity, diversify into new business lines, extend their presence in India and overseas, or repay high-interest loans. All of these fundraising needs can be accomplished through an initial public offering (IPO). What you need to know as an investor is how to apply for an IPO and, more significantly, how to buy an IPO online.
To ensure that they are on the right route while investing in an IPO, investors need to follow a few procedures. An investor with a thorough understanding of these procedures will be able to invest in an IPO with minimal risk.
Step 1: Do your homework before you invest in IPO
The first step in investing in an initial public offering (IPO) is to research and examine the company you want to apply for. The prospectus released by the company is the greatest way to acquire a thorough understanding of its business plan and reasons for going public. The prospectus is available on the website of the Securities and Exchange Board of India.
The IPO is surrounded by a lot of hype, which you should avoid. Learn about the company's past performance and how it intends to invest the funds raised through the IPO in the future. After you've gathered and comprehended all of the facts, make an informed decision before investing.
Step 2: Arrange the Funds
After you've decided on which IPO to invest in, the following step is to secure the necessary capital. An investor's savings can be utilised to purchase an IPO. Because shares can only be purchased in lots, an IPO investment requires a substantial sum of money.
If an investor does not have sufficient finances, he or she can always request for a loan. Several nationalised banks, private banks, and stockbrokers, such as Angel broking, offer low-cost loans.
Step 3: Opening a Demat cum Trading Account
Any investor who desires to participate in an IPO must have a Demat account. This is the most significant requirement for investing in an initial public offering. The use of a demat account makes it easier to buy and sell stocks via the internet. Aadhar card number, PAN card, address, and identity papers are all necessary to start a Demat account. There are a lot of intermediaries and stockbrokers in the market, through which you can easily open a Demat account online in a few minutes. Angel Broking, Zerodha, Upstox, Sharekhan, Motilal Oswal.
Step 4: The Application Process
To understand the application process, the investor should be familiar with ASBA. A facility that allows banks to block money in investors' accounts at the time of submitting bids is known as an application backed by a blocked amount. Along with the details pertaining to lot size, bid number, and more, the investor should agree to set aside cash for such an investment when applying for an IPO.
Step 5: Bidding
Bidding is the next stage. Investors are expected to bid a price within the price range set by the corporation. The lowest price in the range is referred to as the floor price, while the highest price is referred to as the cap price. After the price and lot size are chosen, the total amount is held in the investor's account by banks until the allotment is completed.
Step 6: Allotment of Shares
The allotment of shares is the final and most important phase. The shares will be allocated to investors once all of the preceding processes have been completed and the bidding has been concluded. There's a chance you'll get less than the number of shares you requested. This situation can occur as a result of overwhelming secondary market demand. Banks will unblock the arrested funds in such circumstances. However, if an investor receives the entire allotment of shares, he will get a confirmatory allotment letter (CAN) within six working days after the IPO closing. Now he must wait for the stock of the company to be listed on the stock exchange.
Can I buy IPO online?
Yes, you can buy IPOs via online as well as offline methods. The form is filled out in physical form and submitted to the IPO banker or your broker using the offline approach. In an online application, you can access the application immediately through your broker's trading interface. The benefit of an online IPO is that the majority of your data is immediately entered from your trading / demat account, eliminating your clerical effort. That largely simplifies the online IPO application form fill-up process. In fact, IPO online application is the preferred mode.
Where can I buy IPO shares?
You can buy IPO shares on a stock exchange and trade with them by using your trading and demat account. 
How do I apply for an IPO online?
You can apply for an IPO online via ASBA facility available with most banks or UPI.
You can apply through the online ASBA option on your bank's website. ASBA is an acronym for Application Supported by Blocked Amounts. It keeps money in your account without deducting it. The ASBA function is typically seen in e-services or net banking services. The ASBA service allows you to invest in FPOs and IPOs because it displays all current live issues.
The procedure for applying for shares via UPI is also straightforward:
Step 1: Log in to your trading account and choose the initial public offering (IPO) in which you want to invest.
Step 2: Enter the price at which you'd like to apply for shares, as well as the quantity of lots you'd like to apply for.
Step 3: Complete the application form and include your UPI ID.
Step 4: On the UPI app, approve the block funds request.
Step 5: You're done.
What is cut off price in IPO?
The cut-off price is the price at which investors are issued shares. An initial public offering (IPO) book-building problem begins with a price range. For the issue, there is a minimum and maximum price. An investor can bid for the appropriate amount in multiples of the lot size at a price that is within the acceptable range.
Can I sell IPO immediately?
Yes, you can sell IPO immediately after the very second of listing. However, if the shares are subject to any lock-in period, then you cannot sell them. Generally, there will not be any lock-in period for retail investors but it's always good to check it before applying for an IPO.
Can I apply for IPO twice?
No, a single person cannot apply for an IPO many times through multiple applications. It's a rule that if you submit several applications for an IPO using the same name, demat account, or PAN number, all of your applications will be denied.

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Disclaimer: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.For more information, see our Legal disclosures here.

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