The initial public offering has recently become a hot issue on the stock markets. Many traders could not receive allotments because the supply of accessible stocks did not match the demand. However, this circumstance has, in turn, aided in the development of numerous misconceptions.
Can I apply multiple bids in IPO? One of the most well-known is the suggestion to apply for an IPO using various Demat accounts. But is it the right way? First, let’s look at whether it’s legal and whether it improves the chances of IPO allocation.
IPO Allotment
The first step in the IPO allotment process is the company’s announcement of the price range per share for its IPO in capital markets. The underwriters that the company selected for the IPO set the price. Retail investors can bid on a stock via their Demat accounts once the firm and the underwriters have established a price range. For the sake of transactional simplicity, stocks are bundled into lots, and bids are placed on these lots. Each lot will contain a specific number of the company’s shares. Every investor who makes a bid will receive the allotted lots if the quantity and quantity of lots are equal. But what happens if there are more bids than lots available? The IPO is then considered to be oversubscribed. And can we apply for an IPO through multiple applications? Let’s look at it.
Note-
When demand is higher, IPOs are oversubscribed. This indicates that retail investors believe the company has potential and are confident in its ability to benefit.
Can you submit an IPO application using two Demat accounts?
The answer is no if you just have a single PAN card and both of your Demat accounts are in your name. If you do this, both of your applications may be denied, thereby eliminating your chance of receiving an IPO allotment.
You cannot apply twice with the same Demat account. Additionally, this would be against SEBI’s (the Securities and Exchange Board of India) norms and regulations. Therefore, it may result in the rejection of your application.
To boost your chances of allocation, apply using the Demat accounts of your family and friends with their consent. Furthermore, there is a greater opportunity for you, your friends, or your family to win the allocations if the IPO allotment is distributed using a lottery system. If you win an allocation through the accounts of your family or friends, they will be the sole owners of the shares. A contract should be in place to prevent misunderstandings.
Conclusion
The IPO allotment mechanism is still more chance or lottery-based; even though the tips mentioned above will boost your chances of winning the offer, a lot depends on luck.
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