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Returns of Initial Public Offering in Short Term and Long Term Period


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1 GIDC Rajju Shroff Rofel Institute of Management Studies Vapi, Gujarat, India
     

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The study was done to understand the short term and long term IPO performance. In order to achieve this, we have obtained returns on the day of issue, 30 days after the date of issue. It can be seen that returns obtained by investing in the IPO issued on NSE is more than the return obtained by investing in the IPO issued on BSE. The research paper will help the investor to understand when is the right time for investor to make an exit from the time the investment is made and how much average return the investor can make if he exits its position on the stock. Initially the IPO after getting listed market under performance is negatively related to the size of the firms, suggesting that large IPOs should expect less negative future returns. Similar to the short-term, market condition plays an important role in the aftermarket. The IPOs with excess initial returns tends to offer extremely negative in the long term. The question that is raised is how to interpret the significantly long-run underperformance that follows the IPOs. The IPO’s offered average positive returns on the day of issue, 30 days after the day of issue irrespective of the stock exchange on which the stock is been issued. This result is in contrary to the past result which reveals that the IPO’s underperform after 30 days of issue. The above research paper will help the investor to make required returns if they buy the stocks and sell them at right time.

Keywords

Initial Public Offering (IPO), NSE, BSE
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  • Malhotra, M., &Premkumar, N. (2017). Long run performance of initial public offerings in India. 9(1), 9.

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  • Returns of Initial Public Offering in Short Term and Long Term Period

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Authors

Aabha S Singhvi
GIDC Rajju Shroff Rofel Institute of Management Studies Vapi, Gujarat, India
Pankajray Patel
, India
Yash Doshi
, India

Abstract


The study was done to understand the short term and long term IPO performance. In order to achieve this, we have obtained returns on the day of issue, 30 days after the date of issue. It can be seen that returns obtained by investing in the IPO issued on NSE is more than the return obtained by investing in the IPO issued on BSE. The research paper will help the investor to understand when is the right time for investor to make an exit from the time the investment is made and how much average return the investor can make if he exits its position on the stock. Initially the IPO after getting listed market under performance is negatively related to the size of the firms, suggesting that large IPOs should expect less negative future returns. Similar to the short-term, market condition plays an important role in the aftermarket. The IPOs with excess initial returns tends to offer extremely negative in the long term. The question that is raised is how to interpret the significantly long-run underperformance that follows the IPOs. The IPO’s offered average positive returns on the day of issue, 30 days after the day of issue irrespective of the stock exchange on which the stock is been issued. This result is in contrary to the past result which reveals that the IPO’s underperform after 30 days of issue. The above research paper will help the investor to make required returns if they buy the stocks and sell them at right time.

Keywords


Initial Public Offering (IPO), NSE, BSE

References