Active Stocks
Thu Jul 11 2024 11:10:11
  1. Tata Steel share price
  2. 169.90 1.13%
  1. Power Grid Corporation Of India share price
  2. 344.50 -0.46%
  1. HDFC Bank share price
  2. 1,601.50 -1.52%
  1. NTPC share price
  2. 379.55 -0.54%
  1. Tata Motors share price
  2. 1,020.80 1.53%
Business News/ Markets / What is the role of an IPO in the Stock Market?
BackBack

What is the role of an IPO in the Stock Market?

Initial public offerings (IPOs) allow companies to raise funds by selling shares in the primary market. We explain this in detail in this post.

IPO is an abbreviation for Initial Public Offering, which means the company offers it’s fresh shares to the public for the very first time. (MINT_PRINT)Premium
IPO is an abbreviation for Initial Public Offering, which means the company offers it’s fresh shares to the public for the very first time. (MINT_PRINT)

IPO is an abbreviation for Initial Public Offering, which means the company offers it’s fresh shares to the public for the very first time. In a way, the company chooses to give up it’s ownership to stakeholders.

Every company is in need of funds in order to expand its activities, amalgamation or acquisition of other companies because of which IPOs are introduced in the market as a good amount of funds are raised from the process.

Initial Public Offerings are considered a big deal in stock market calendars, as the company can use it as a marketing venture for their products and services for new customers in the market.

Purpose of IPO

Whenever a company goes public it is inferred that the company has become successful and requires funds to expand further. IPOs can also be introduced for mergers and acquisitions, in case a company is thinking of acquiring another business it can offer it’s share as a payment.

IPO is also a rewarding time for business owners as they earn millions the day the company decides to go public as they award themselves with a significant portion of initial shares of the stock.

Function of IPO in economy

Number of Initial Public Offerings issued at a time explains the condition of the economy and the stock market. As during the recession, not many investors consider it worthy to invest in stocks as the stock market itself goes down during recession and depression time periods.

While if IPOs see a boom in their bidding then it can be concluded that the economy is in the repairing mode and the economy is churning again and it’s fruitful to invest and the economy has a wide range of opportunity at the moment.

Initial Public Offerings is considered a crucial time for the stock market, as the investors can earn a good amount of funds over the long run if the company chosen has been a good performer in the market.

Choosing a company for investing in their respective IPOs is an extremely crucial part as it can either multiply your investment or can bring it down to nil.

Also, SEBI scrutinises companies before they issue their stocks in the market and provide all the necessary information to the investors so that investors are informed and can take their decision wisely.

 

We explain here how to find a good IPO to invest in
View Full Image
We explain here how to find a good IPO to invest in

3.6 Crore Indians visited in a single day choosing us as India's undisputed platform for General Election Results. Explore the latest updates here!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 13 Jun 2022, 07:56 AM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started