A Guide to Investment Through Primary Market
When a company offers shares to the public, it announces a public offering. Individuals interested can apply by submitting the necessary application form. Issuing securities requires adherence to specific rules and regulations. Shares are allotted in accordance with these regulations and credited to the applicant's demat account held with a Depository Participant. Allotment occurs in dematerialised form. This means they exist electronically rather than as physical certificates. Investors have the choice to convert to physical shares. Following the public offer's closure, allotted shares are listed on Stock Exchanges within 3 working days. The listing allows these shares to be traded by investors in the secondary market.
- Complete the online / offline application form: During a public offer, you can buy shares directly from the issuing company by filling out an online / offline application form and making payment within the specified period. You need to provide your personal details such as name, address, and contact number along with your bank details. You also need to mention the number of shares you want to buy.
- Make the Payment: Investors keen on participating in the IPO can apply through Application Supported by Blocked Amount (ASBA) or Unified Payment Interface (UPI) for payment. Once the application is submitted, the invested amount is blocked until shares are allocated.
- After IPO Closure, Shares are Credited: Once the IPO is over, it usually takes three business days for the listing process to finalise. Shares are then credited to investors' demat accounts and the funds are deducted from their bank accounts. If for some reason shares aren't allocated, the blocked funds are released.
Application Supported by Blocked Amount (ASBA): Simplifying IPO Investments
Investors have a convenient option to apply for securities in IPOs through ASBA. With ASBA, the amount equivalent to the price of the applied shares is blocked in the investor's account until allotment. Once the shares are allotted, the necessary amount is deducted from the account. The blocked funds continue to earn interest. There is no refund needed in case of non-allotment. This completely eliminates the hassle of sending physical cheques for IPO applications. You can easily find the list of banks facilitating ASBA on SEBI's website, ensuring a seamless experience for investors. Additionally, investors can use UPI as a payment mechanism for investing in IPOs.
Exploring the Process of Investment in the Secondary Market
After setting up a trading or broking account with a recognised stockbroker, you can buy or sell shares of companies listed on the stock exchange. You can do this by visiting the broker’s office in-person or applying online. Most brokers offer an online platform accessible via their website or mobile app. Those who prefer phone-based transactions can use the broker’s Call & Trade service.