IPOs in the Indian market present a good opportunity for returns

In my last 2 big posts about investing, I do not think I have given some great recommendations. At one point when the market was recovering, I wrote a post saying stay away from stocks but if one wants then pick up debt free companies. Since the post, the market, almost any equity index around the world, went to ATHs or recovered quite a lot. My strategy of investing in debt-free companies did pay off but not because the companies were debt-free but because the market generally went up.

The second post was about holding on to equities because the elections are around the corner and the market will be pumped up and liquidity will be plenty. That was a month ago and since then, there has been a decent correction in the market. I did act on both the posts and well, I think I have generally underperformed the broader market.

Moreover, I have not been able to fully track the market or stay up to date with everything that is going one. Once I go to my farms, I am cut-off from the world. However, the Indian market has come up with a lot of IPOs lately and all of them have done exceptionally well. I would suggest people look at that. Let us look at some of the IPOs that have hit the market in the last couple of months and their performances -

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Now as a strategy, I always look for opportunities where the institutional investor section is oversubscribed and I always play for one lot. This is because for me these are not long term investment. This is a quick get-in and get-out strategy. Allocations are based on luck and I have had allocations in 2 IPOs and my wife 1 and 2 have yielded 100% returns and one -10%.

I think a lot of companies will be looking to raise capital in the coming months to prepare for any adverse economic situation ahead. Moreover, equity markets have rebounded to levels pretty close the pre-covid era and the real economy will take years to get back to pre-covid times. Therefore the industry probably understands that markets are over-valued and this might be the right time to raise money. Also central bank liquidity is not what is needed to keep a business going. It is real demand in the real economy.

I do think that playing in these IPOs is a good way to make some quick return. Pay attention to the institutional investor section as I think their decision making is better than retail participants in these IPOs.

Hope you find this useful. Let me know your thoughts.


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