Investing in an Initial Public Offering (IPO) can be exciting, especially if the stock performs well on the listing day. But many investors have one big question: how to sell IPO shares, when is the right time to do it?
This detailed guide outlines everything you need to know about selling IPO shares, including various strategies, the ideal time to sell, and other important considerations.
Let's take a look at some insightful strategies to help you decide how to sell your IPO shares:
A significant number of investors choose to sell their IPO shares on the very day they are listed. This approach works best when the stock debuts at a premium over its issue price, allowing you to book immediate profits. However, listing-day trading can be volatile, so this strategy is often chosen by investors who want quick returns without waiting for long-term performance.
Another popular method is to sell only a portion of your allotted IPO shares, just enough to recover your initial investment or related expenses. This way, you safeguard your capital while keeping some shares invested in case the stock continues to rise in the future. It’s a balanced strategy for those who want to reduce risk while still participating in potential growth.
If you are unsure about the stock’s direction after listing, selling in instalments can be a smart move. Instead of exiting fully at one price point, you sell small portions over time. This helps you average your returns and manage risks more effectively, especially in volatile market conditions where prices may fluctuate widely in the weeks following the IPO.
For investors who want a structured and disciplined approach, selling half of the shares on listing day and then gradually selling 10% every quarter can be effective. This method allows you to capture short-term listing gains while keeping a portion invested for long-term opportunities. It combines immediate profit-taking with gradual exposure to the company’s potential growth story.
You can sell IPO shares as soon as they are listed on the stock exchange and become available for trading in your Demat account.
Once the shares are listed, you can place a sell order through your trading account during regular market hours.
Before selling your IPO shares, it's important to keep certain things in mind:
Selling IPO shares is all about aligning your strategy with your financial goals, market outlook, and risk appetite. Whether you choose to book quick profits on listing day or hold your shares for long-term growth, planning ahead and understanding the risks, taxes, and restrictions will help you make smarter decisions.
Yes, retail investors are allowed to sell their IPO shares on the listing day as soon as the stock begins trading on the exchange. There are no restrictions for them.
Trading usually begins at 10:00 AM on the NSE and the BSE. However, the exact time an IPO lists can vary slightly, as it depends on the specific exchange and the company.
Yes, to hold and sell IPO shares, you must have a Demat account. It's a mandatory requirement, as you cannot receive your allotment or place a sell order without it.
If you don’t sell on the listing day, the shares remain in your demat account, and you can sell them later anytime during market hours, just like regular stocks.
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