2007-02-09 02:02:48 · 6 answers · asked by Anonymous in Business & Finance ➔ Investing
Because this is the first time their share is going to be listed. So the valuation is not determined by the stock market. Also a reason could be, that when they say that a premium of 10-15 % is also there, it attracts more and more investors.
Golden formula - When demand increases, prices increase. So on day of listing price will increase.
Let us take eg. of Cairn
Very less people applied for Cairn, so stocks of Cairn sold at 10% down on the listing day.
2007-02-10 00:43:24 · answer #1 · answered by Oye chak de phatte!! 5 · 0⤊ 0⤋
because only the investment bankers handling the deal & big institutional investors get them at those prices. by the time you see the issue as an individual stock investor, the price has been jacked up, you buy at the inflated prices while they're selling.
stay away from IPOs unless you can truly get in on the ground floor, otherwise, you'll be left holding the bag while the big boys get richer off you.
2007-02-09 02:12:12 · answer #2 · answered by Anonymous · 0⤊ 0⤋
they need more money that's why under priced
by making under prices , in fact it is to influence even middle class people to invest for shares.
you see, most of the population is covered by middle class people , hence much money obtained for the development of the companies by selling shares at cheaper rate . this is one of the idea , why they think.
2007-02-09 02:10:55 · answer #3 · answered by raj 1 · 0⤊ 0⤋
because people want to make money
2007-02-09 03:12:00 · answer #4 · answered by ashwath v 2 · 0⤊ 0⤋
so that more people buy their shares!
2007-02-10 01:44:19 · answer #5 · answered by sushobhan 6 · 0⤊ 0⤋
JUST BECAUSE THEY CARRY HIGHEST RISK...........HIGHER THE RETURN ,HIGHER THE RISK..................IT IS FROM COMPANY'S POINT OF VIEW
2007-02-09 03:33:25 · answer #6 · answered by Shyon 2 · 0⤊ 0⤋