InvestorQ : How the IPO listing price is determined?? Only based on demand or any other factors ?
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How the IPO listing price is determined?? Only based on demand or any other factors ?

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Riya Dwivedi answered.
3 months ago
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Let me start off by saying that the IPO listing price is determined by market forces of demand and supply. You normally look at the grey market price or GMP for an indicator but please remember that this is an unofficial price so you cannot take it as any kind of official benchmark. Here are some factors that influence IPO listing price.

· How attractively is the IPO priced? If the pricing is too aggressive in terms of valuations, normally the listing price tends to take a hit.

· Market conditions on the day of listing also matter. IPOs are always comfortable listing on a day when the markets are bullish or at least the undertone is not weak.

· Another key factor is the extent of oversubscription to the issue. Normally, if oversubscription is high then it results in demand for the stock on the day of listing and in such cases, the listing price is good.

· Finally, the extent of funded applications also matters. Normally, HNI or non-institutional quota is funded. If the response is huge, you expect heavy selling as funded applications look for an exit. This results in pressure on listing day.

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