IPO Listing
Understanding the IPO listing process helps investors make informed decisions. Whether you’re buying IPO shares in the pre-open market, trading in the regular session, or analyzing listing groups, knowing the fundamentals ensures a strategic approach to IPO investing.
A private company makes its shares publicly tradable on stock markets through IPO listing. Once listed public shareholders can buy and sell stock shares at NSE and BSE platforms under the guidance of stockbrokers.
What is IPO Listing?
The IPO process ends with listing when investors receive their shares through demat accounts after allotment procedures. The public transition between IPO subscription in the primary market and share trading in the secondary market takes place through IPO listing.
Types of IPO Listings
- Mainboard IPOs – Listed on BSE, NSE, or both.
- SME IPOs – Listed on NSE Emerge or BSE SME.
IPO Listing Date
A company makes its shares publicly tradable through the IPO listing date. Starting on December 1, 2023, IPOs must list their shares on the market three business days following the issue closing period.
IPO Listing Process in India
A company seeking an IPO listing has to follow several stages:
- A firm designates its merchant bankers by performing a selection process of lead managers.
- SEBI together with stock exchanges conducts an examination to determine the qualification of the company seeking investment.
- A set of draft offer documents needs to be submitted by merchant bankers directly to SEBI.
- A regulatory approval triggers public investor roadshows that use PR campaigns to spread awareness.
- During bidding Investors place their applications for share purchase in the IPO.
- The successful bidders receive allotted shares and receive refund payments.
- After receiving approval Exchange trading begins for the shares to trade publicly.
IPO Listing Time
The opening session of IPO trading during the listing day contains two distinct periods.
1. The trading period before market opening occurs between 9:00 AM and 10:00 AM.
- Investors possess the ability to place modify and cancel orders between 9:00 AM and 9:45 AM during this phase.
- The matching and execution system (9:45 AM - 9:55 AM) leads to the determination of an equilibrium price which becomes the listing price.
- Trading orders pass to the normal trading session during this buffer period from 9:55 AM until 10:00 AM.
Equilibrium Price Calculation
The determination of the equilibrium price happens through analysis of both supply and demand forces. The calculated Common Equilibrium Price equals ₹107.50 because BSE trades at ₹120 for 300 shares and NSE trades at ₹100 for 500 shares.
(₹120 x 300 + ₹100 x 500) / 800 = ₹107.50
The derived figure forms the foundation for establishing listing price calculations.
2. Regular Trading Session (10:00 AM - 3:30 PM)
Once the stock is listed, it follows normal stock exchange trading rules with daily price bands.
Steps to Buy/Sell IPO Shares in Pre-Open Market
- Place a limit order at your desired price.
- If the stock lists at your price or better, the order gets executed.
- Unexecuted orders move to the regular trading session.
Example of Pre-Market Order Execution
Pre-Open Trading Rules
- Only limited orders are allowed.
- No market orders are accepted.
- Orders can be modified/canceled until 9:45 AM.
- All unexecuted orders shift to the regular session.
IPO Listing Price & Circuit Limits
- Listing price is determined in the pre-open session.
- IPO stocks have circuit limits on listing day:
- Up to ₹250 crore issue size – 5% band
- Above ₹250 crore issue size – 20% band
IPO Shares Listing Groups
Stock exchanges categorize newly listed IPOs based on issue size and market capitalization.
BSE IPO Listing Groups
Investment Trusts Listing on BSE
NSE IPO Listing Groups
Investment Trusts Listing on NSE
Comparison: IPO Listing vs Issue Price
- Issue Price: The price at which investors subscribe to the IPO.
- Listing Price: The opening price on the stock exchange.
- Opening Price: The price at which trading starts after the listing price is set.
FAQs About IPO Listing
1. What happens if an IPO lists at a discount?
If the IPO lists below its issue price, investors can choose to hold or sell based on market demand.
2. Can I sell IPO shares on the listing day?
Yes, IPO shares can be sold immediately after listing.
3. What is the best time to buy IPO shares on listing day?
Investors often wait for initial volatility to settle before buying, usually after the first hour of trading.
4. Why do IPOs have circuit limits?
To control extreme price movements and ensure orderly trading.
5. What is the settlement cycle for IPO shares?
IPO shares follow the T+2 settlement cycle, meaning trades are settled in two business days.
