The listing date is the day on which a company’s shares start trading on the stock exchange after its IPO. Before this day the shares exist only as an allotment in the registrar’s records and, after the credit step, in your demat account, but they cannot be traded. Under SEBI’s present timetable the shares must list within three working days of the issue closing, a schedule known as T plus 3, where T is the closing day. The exchange announces the exact date in a circular once the basis of allotment is finalised. On listing day there is a special pre-open session in which the opening price is discovered through an auction-like process, followed by normal trading. The price at which the stock opens, compared with the issue price, gives the listing gain or loss. Investors who received shares can sell from the first minute of trading, subject to price bands the exchange applies to new listings, which are tighter for SME and certain other issues. Listing dates appear on every IPO page on IPO Bulletin along with the issue price, so you can plan ahead.
Example: An IPO closes on Monday 20 October. Counting three working days gives Thursday 23 October as the listing date. Allotment is finalised on Tuesday, shares reach demat on Wednesday evening, and trading starts on Thursday morning.
The basis of allotment is the method and result by which shares are distributed among applicants after an IPO closes. It is finalised by the registrar to the issue in consultation with the stock exchange, and the exchange approves it before shares are credited. The document lists, for each category, how many applications were received, how many shares were applied for, the oversubscription ratio, and how many applicants received how many lots. Where a category is undersubscribed, every valid applicant gets the full quantity applied for. Where it is oversubscribed, shares are allotted proportionately in the QIB and NII categories, and by a computerised lottery in the retail category, so the minimum allotment is one lot. Because the basis shows exactly how many lots each applicant got, it is the best proof of how fair the process was. The basis of allotment is usually published on the registrar's website and the exchanges one working day after the issue closes, around the T plus 1 day. Investors can then check their status using their application number or PAN.
A demat account, short for dematerialised account, is an electronic account that holds your shares and other securities in digital form, much as a bank account holds money. It is opened with a depository participant, such as a broker or bank, and the securities are recorded with one of the two depositories in India, NSDL or CDSL. You need a demat account to apply for an IPO, because allotted shares are credited there. To open one you need your PAN, Aadhaar-based or other KYC documents, a bank account and a mobile number linked for verification, and the process is usually completed online. Each account has a Depository Participant ID and a client ID, which together identify it in IPO applications. Most investors also have a trading account linked to the demat account so they can buy and sell shares on the exchange. Demat accounts have charges such as annual maintenance and transaction fees, which vary between brokers. For safety, nominate a beneficiary, never share your login or OTP, and check your holdings statements regularly. Securities held in demat form cannot be lost, forged or damaged, unlike paper certificates.
Listing gain is the percentage by which a stock's price on listing day is higher than its IPO issue price. It is measured most often at the opening price, but can also be quoted at the day's close. A stock issued at Rs 100 that opens at Rs 125 has a listing gain of 25 percent. A negative figure is a listing loss, sometimes called a discount listing. Listing gain depends on subscription levels, the market mood on listing day, the valuation, the news around the company and the grey market premium, although none of these is a reliable predictor. Many investors apply for IPOs mainly in the hope of a listing gain and sell on the first day, while others hold for the long term. Remember that the gain is only realised when you sell, and that trading costs and taxes apply. Short-term gains on listed shares sold within a year are taxed at the short-term capital gains rate in force, so check the current rate with a tax adviser. IPO Bulletin records the listing price and gain for each listed IPO, which is useful for judging how similar issues have performed historically.
The listing date is the day on which a company's shares start trading on the stock exchange after its IPO. Before this day the shares exist only as an allotment in the registrar's records and, after the credit step, in your demat account, but they cannot be traded. Under SEBI's present timetable the shares must list within three working days of the issue closing, a schedule known as T plus 3, where T is the closing day. The exchange announces the exact date in a circular once the basis of allotment is finalised. On listing day there is a special pre-open session in which the opening price is discovered through an auction-like process, followed by normal trading. The price at which the stock opens, compared with the issue price, gives the listing gain or loss. Investors who received shares can sell from the first minute of trading, subject to price bands the exchange applies to new listings, which are tighter for SME and certain other issues. Listing dates appear on every IPO page on IPO Bulletin along with the issue price, so you can plan ahead.
Allotment is the step after an IPO closes in which the company decides who receives shares and how many. Once bidding ends, the registrar prepares the basis of allotment, which explains how the shares were shared between categories and applicants. If an issue is not oversubscribed in a category, most valid applicants get what they asked for. If it is oversubscribed, shares are rationed. In the retail category, successful applicants are chosen by a computerised lottery and each winner usually receives one lot, because the demand is far larger than the supply. Larger categories receive shares in proportion to their bids. After allotment, shares are credited to the demat accounts of successful applicants, and money for unsuccessful applications is released from the ASBA block. SEBI requires the whole process, from issue close to listing, to be completed within three working days. You can check your allotment status on the registrar's website using your application number, PAN or demat details, and on the exchange page for the issue.