Investing made simple

How an IPO works

An initial public offering (IPO) is when a company sells shares to the public for the first time. The IPO stays open for three working days. Then the registrar gives out shares, and the stock lists on NSE/BSE, usually three working days after closing (T+3).

• Price band: the range within which you bid. Most retail investors bid at the upper end (cut-off price).
• Lot size: the minimum number of shares per application; you can bid in multiples of it.
• Categories: QIB (institutions), NII (high-net-worth) and retail (bids up to ₹2 lakh) each get a fixed share of the issue.

Track open issues on Live IPOs and check dates on the IPO calendar.

What GMP tells you

Grey market premium (GMP) is the unofficial premium at which IPO shares trade before listing. It is a sentiment gauge, not a forecast: it has no regulatory backing, is thinly traded and can swing sharply in the final days.

Use it alongside subscription data (especially QIB demand), valuation versus listed peers and the company’s financials. See today’s figures on the GMP tracker.

Improving your allotment chances

In oversubscribed retail categories, allotment is by lottery. Each winner gets one lot. Applying for more lots does not improve your odds; applying from different family members’ PANs (each with its own demat account) does.

After allotment day, check your status on the official registrar.

Choosing a mutual fund category

• Large cap / index funds: a good base for most people. Less ups and downs, low cost.
• Flexi / multi cap: the manager moves across company sizes; good single-fund equity choice.
• Mid & small cap: can grow more but can also fall more. Good if you can wait 7+ years.
• ELSS: equity with a 3-year lock-in; eligible for Section 80C under the old tax regime.
• Debt & liquid: for stability, emergency funds and short-term goals.

Pick funds that match your goal and time horizon, and review them once a year. An advisor can help you choose, invest and stay on track. Browse schemes on Mutual funds.

Why SIPs work

A systematic investment plan invests a fixed amount every month. You buy more units when prices are low and fewer when they are high (rupee-cost averaging), and the habit removes the temptation to time the market.

Raising your SIP by 10% every year (a step-up) can grow your final amount a lot. Try it with the SIP calculator.

Capital-gains tax in brief (from July 2024)

• Equity & equity funds: gains on units held 12 months or less are taxed at 20%; held more than 12 months, 12.5% above ₹1.25 lakh a year.
• Debt funds bought after 1 April 2023: taxed at your income-tax slab rate regardless of holding period.
• Gold & property: long term if held more than 24 months, taxed at 12.5% without indexation.

Estimate your liability with the capital gains calculator.