Initial Public Offering (IPO) - Investing In Capital Markets Of India: A Critical Analysis
Sonal Gupta & Shivani Khareedi, Law Students at Symbiosis Law School, Hyderabad.
The research paper aims to understand a part of the world of the stock market- the primary market. The author discusses the process of investment in the primary market, underpricing of the initial public offering, and the survival of initial public offering at the time of the global economic crisis. Initial public offering or IPO is the process of “going public”. A private company offers its shares to the public through the issuance of IPOs where the company’s shares are listed on a recognized stock exchange for the first time for the public to purchase. The issuance of IPOs is a popular method for companies to acquire capital through the public. Such IPOs are issued by following a process as prescribed by law. The author discusses the process involved in such issuance and the risks involved in investing in such IPOs. Underpricing is a very common practice involved while dealing with IPOs, which affects the board members and owners of the company. Signaling is another important concept that helps traders to estimate when to invest in such shares. These concepts are discussed in detail in the research paper. Further, the author discusses the relationship between IPOs and Non-Banking Financial Companies (NBFCs). This research helps one to understand how the primary market plays an important role in the stock market and how it helps companies and investors to make more money.
Key Words: initial public offering, primary market, shares, company, capital, private, public, underpricing, signaling, NBFC.