Manish is in a dilemma. Until two weeks ago, his investment advisor was telling him to buy whichever stocks he wants to buy because, according to him, he cant lose any money in this market. “You should be amazingly foolish to lose money in this market,’’ advisor used to repeat. He also wanted Manish to participate in every initial public offer hitting the market. When Manish pleaded lack of funds, the advisor was ready to arrange a loan. Again, the logic was the same. “You wouldn’t lose any money on an IPO in this market.’’ You guessed it.
Manish had participated in every IPO till the last two weeks. He made money on most of them. The last IPO he had participated, with borrowed money if you want to know, was Reliance Power. He is hopeful of getting at least a few shares and sell it for a profit on listing.
Sensex's plunge impacts investor response to IPOs
However, this is only half of the story . Suddenly, his investment guru has changed track. He doesn’t approve of any of the IPOs that are hitting or about to hit the market. He thinks they are expensive . He had warned Manish against participating in any of them. Manish is an obedient client. He wouldn’t apply for any of the IPOs, but he wants to know what changed all of a sudden. He claims the interest is purely academic. “There were people who were saying the recent IPOs are expensive . Still, they were asking people to subscribe for listing gains. Why have they changed their stance now?’’ asks Manish.
If you would approach any of the seasoned participants in the stock market, they would smile at you in reply. “The logic is very simple. You don’t want to be seen as a fool by your clients. For example, I have told most of my clients to stay away from Reliance Power IPO. But many of them ignored my advice and went for it. They were certain that they would make huge money on listing, considering the hype surrounding it,’’ says an investment advisor. “Similarly, in the past also I have always maintained that the issues areaggressively priced, but one should consider investing because of the current market trend, where everybody makes money on listing. I have to do it. Otherwise, my clients would think I am a fool. As for me, I have invested only in a few IPOs in the recent past,’’ he confesses.
Sure, one understands the difficulty of asking people to turn against the tide. But why are advisors singing a different tune now. Very simple , chorus our seasoned players. “The market is languishing for sometime now. Barring a few, it would punish every expensive issue at the moment,’’ says the research head of a broking firm. “That is why you would change a shift in stance in recent IPO reports. Earlier, every issue got a subscribe tag easily. Now, suddenly everybody has warmed up to valuations. Even slightly expensive issues are getting do not subscribe recommendation,’’ he adds.
Manish had participated in every IPO till the last two weeks. He made money on most of them. The last IPO he had participated, with borrowed money if you want to know, was Reliance Power. He is hopeful of getting at least a few shares and sell it for a profit on listing.
Sensex's plunge impacts investor response to IPOs
However, this is only half of the story . Suddenly, his investment guru has changed track. He doesn’t approve of any of the IPOs that are hitting or about to hit the market. He thinks they are expensive . He had warned Manish against participating in any of them. Manish is an obedient client. He wouldn’t apply for any of the IPOs, but he wants to know what changed all of a sudden. He claims the interest is purely academic. “There were people who were saying the recent IPOs are expensive . Still, they were asking people to subscribe for listing gains. Why have they changed their stance now?’’ asks Manish.
If you would approach any of the seasoned participants in the stock market, they would smile at you in reply. “The logic is very simple. You don’t want to be seen as a fool by your clients. For example, I have told most of my clients to stay away from Reliance Power IPO. But many of them ignored my advice and went for it. They were certain that they would make huge money on listing, considering the hype surrounding it,’’ says an investment advisor. “Similarly, in the past also I have always maintained that the issues areaggressively priced, but one should consider investing because of the current market trend, where everybody makes money on listing. I have to do it. Otherwise, my clients would think I am a fool. As for me, I have invested only in a few IPOs in the recent past,’’ he confesses.
Sure, one understands the difficulty of asking people to turn against the tide. But why are advisors singing a different tune now. Very simple , chorus our seasoned players. “The market is languishing for sometime now. Barring a few, it would punish every expensive issue at the moment,’’ says the research head of a broking firm. “That is why you would change a shift in stance in recent IPO reports. Earlier, every issue got a subscribe tag easily. Now, suddenly everybody has warmed up to valuations. Even slightly expensive issues are getting do not subscribe recommendation,’’ he adds.
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