Consistent growth in foreign direct investment (FDI) and foreign institutional investors (FII) in the past two decades reflect emerging India’s growth story. Factors such as cheap labour, abundant resources, young demographic dividend, and high disposable income make India one of the most popular global investment destinations. The 2008 recession was one of the toughest periods for the global economy, with top global indices such as Nasdaq, Dow Jones, Nikkei, FTSE, and Hang Seng collapsing drastically. However, Indian stock markets stood up like a rock fighting the tide during the same time. In the past two decades, BSE Sensex grew almost 10 times from 3,000 in 1995 to around 30,000 in 2017. Moreover, as per a PTI report, net inflow from foreign portfolio investors (FPIs) into the Indian stock markets from Oct 01 to Oct 16, 2015 was Rs. 3,295 crore and that for the debt markets was Rs. 13,695 crore and thus, total net inflow was Rs 16,990 crore. A policy-oriented central government led by Prime Minister Narendra Modi brightens the growth horizons for India. The best part is that the rally isn’t over yet. Thus, if you missed out on the opportunity to maximize your money during this period, don’t worry, this is the most opportune time invest in the Indian stock markets for wealth creation. Let’s now look at IPO as one of the best possible ways in which you can invest in the Indian stock markets in addition to the direct buying and selling of shares, which happens in the secondary market.
Initial public offering, also known as IPO, has become a popular route for investors to enter the stock market. IPO provides investors with the opportunity to invest early in a company at a much lower share price. Thus, once the company grows with time, the IPO investors would benefit through higher valuation and RoI. In 2016, known as the year of IPOs, Indian companies that floated IPOs raised around $3 billion as proceeds from subscriptions by September 2016, which was the most money raised through the IPO route since 2007 (Source: Live Mint). ICICI Prudential Life Insurance Company Ltd became the first Indian insurer to float an IPO and go public. The company offered 132.37 million shares, which got oversubscribed by around 10 times (Source: Live Mint). The other popular IPOs that were oversubscribed by investors include D-Mart and BSE Ltd.
The IPO momentum is set to continue in 2017 with companies such as NSE, CDSL, Vodafone India, and SBI Life Insurance all set to float their IPO. If you want to be an early entrant in a top company and pay less now for getting more out of your investment, go the IPO way. It would not only make you enter the market, it will also ensure that your returns are multifold. For instance, BSE’s IPO issue price was Rs. 806, but its share price on the day of listing went up to Rs. 1,130, proving IPO investors with a premium of around 40.19% within a few days (Source: ET).
If you are not comfortable in terms of taking a decision on the IPO you want to subscribe, take help from a professional expert. They will first understand your financial objectives and guide you with regards to key fundamentals that you would need to understand to invest in the stock market through IPO. Please note that IPO is not the only route to invest in the Indian stock markets. You can become a major part of the growth story of the Indian markets by investing in OFS, Corporate Fixed Deposits, SIPs, NFOs, and ELSS.
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Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.