An IPO or Initial Public Offering is when a private company becomes a public company and offers its shares to the public for the first time. A private company approaches stock exchanges like NSE or BSE to make its shares available to retail investors. IPO is becoming a popular investment option for traders due to its high returns. You can apply for an IPO both offline and online. If you choose the digital route, here are a few things you must know.
Demat account:
If you want to apply for an IPO online, you must have a Demat account. A Demat or Dematerialised account is a digital depository of all your financial assets. A Demat account is necessary because when you buy an IPO, it will be stored in your Demat account. A Demat account is useful in trading as it stores all the shares, stocks, bonds, securities, etc. in a safe and consolidated way.
Trading account:
With a Demat account, you can buy IPO shares. However, to sell your shares when you need to, a trading account is important. A trading account is linked to your bank account and facilitates the buying and selling of shares. For IPO, it is advisable that you open your Demat and trading account together. You will need your PAN card, address proof and bank statement details to open a trading account.
Applying through banks:
There are a few ways to apply IPO online, and one of them includes applying through your bank. To do this, you need to visit your online banking application and log in using your credentials. Go to the IPO section and find the ASBA service. ASBA is Application Supported by Blocked Amount through which you can apply for an IPO online. This process makes sure that the amount is deducted from your bank only when you receive the allotted shares, making it an investor-friendly route for IPO.
Applying through broker:
Another way for you to invest in an Initial Public Offering is through online brokers. Do your research about available online brokers which offer IPO services. After you have chosen one, create an account or log in if you already have one. Go to the IPO section and select the size and units of the IPO that you want to bid for. You will also need a UPI account to complete this process. You have to provide the online broker platform with your UPI ID for the transaction to take place. Once the bid is approved, your UPI app will be notified about the same.
Now that you have learned about the important aspects involved in the online application process of an IPO, it is necessary to be vigilant and make careful decisions, as IPOs are high-risk avenues. After creating your Demat and trading account, choosing an online broker or taking the Internet banking route, you must also keep an eye on the companies’ performance in the market through a candlestick chart or market indices so that you make informed decisions and earn profits.