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SUMMER TRAINING REPORT

ON

"A STUDY OF INVESTING PATTERN OF NEW RETAIL

INVESTORS IN AN IPO "
Submitted in Partial Fulfillment of the requirements of

BACHELOR IN BUSINESS ADMINISTRATION

SESSION 2021-22

FACULTY DETAILS: STUDENT NAME:

MS. ARTI VERMA YASH SINGH

ASST. PROFESSOR ENROLLMENT NO: 07015601721

JIMS ENGINEERING MANAGEMENT TECHNICAL CAMPUS

48/4 Knowledge Park III, Greater Noida-201306 (U.P.)
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DECLARATION

I hereby declare that this Summer Training Report titled _ A STUDY OF

INVESTING PATTERN OF NEW RETAIL INVESTORS IN AN IPO submitted by me
to JEMTEC,
Greater Noida is a bonafide work undertaken during the period from 01/09/2021 to
28/09/2021 by me and has not been submitted to any other University or Institution
for the award of any degree diploma / certificate or published any time before.

Date: 29 /11 / 2023

Name: YASH SINGH
Enroll. No.: 07015601721

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CERTIFICATE

This is to certify that as per best of my belief the project entitled

“A STUDY OF INVESTING PATTERN OF NEW RETAIL INVESTORS IN AN IPO ”
is the bonafide research work carried out by KUNAL PAREKH; 05125501719
student of BBA, JEMTEC, Greater Noida, in partial fulfillment of the requirements
for the Summer Training Report for the Degree of Bachelor of Business
Administration.
He has worked under my guidance.
I wish him a success in all his future career endeavors

Faculty Guide
Name: MS. Arti Verma
Designation: Professor

Signature with Date

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ACKNOWLEDGEMENT

I offer my sincere thanks and humble regards to JEMTEC, Greater Noida for
imparting us very valuable professional training in BBA.
I pay my gratitude and sincere regards to Dr. Rashi Gupta, my project
Guide for giving me the cream of her knowledge. I am thankful to her as she has
been a constant source of advice, motivation and inspiration. I am also thankful to
her for giving her suggestions and encouragement throughout the project work.
I take the opportunity to express my gratitude and thanks to our computer Lab staff
and library staff for providing me opportunity to utilize their resources for the
completion of the project.
I am also thankful to my family and friends for constantly motivating me to
complete the project and providing me an environment, which enhanced my
knowledge.
Date:28 /09 / 2021 Name: KUNAL PAREKH
Enroll. No.: 05125501719

Course: BBA (V-Sem)

(Signature of the Student)

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Company Summer Internship Certificate

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EXECUTIVE SUMMARY

IPO's are essential in getting necessary funds for the companies to scale. It also provides an exit
route for the early investors and Venture Capitalists.

While the companies fulfils it's financial needs, IPO's paves way for retail investors to jump in
and secure an investment vehicle to substantiate their investment decision into profit booking
mechanism.

It may seem easy and fascinating for the new investors to looks for gains in the IPO market,
but it's not a childsplay. IPO Investments have eroded many of their wealth and have brought
them to countless debts.

There are many forces which drive the IPO market. It is therefore necessary for every individual
or partnered investors to look through many factors which can effect his or his investments
decision and stick to those investment decisions which guarantees a minimum loss and
maximum profit prospects.

To know the investing pattern the retail investors follow, gives us an insight of what guides the
investors for their IPO decisions. This report attempts to capture different factors attributed by
the new retail investors to buy an IPO. An indepth study can reveal the falling points where the
new investors lacks and where improvements can be made to assign better risk proportions
properly and effectively.

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TABLE OF CONTENTS

S NO. TOPIC
PAGE NO.
1. Declaration I
2. Bonafide Certificate II
3. Acknowledgement III
4. Company summer IV
internship certificate
5. Executive summary V
6. Chapter-1 1-2
Introduction
7. Chapter-2 3-16
Company profile
8. Chapter-3 17-21
Literature review
9. Chapter-4 22-25
Research methodology
10. Chapter-5 26-40
Data Analysis and
Presentation / Study of
topic
11. Chapter-6 41-42
Findings and
Suggestions
12. Chapter-7 43
Conclusion
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CHAPTER 1 :
INTRODUCTION
Strong marketing strategies are clearly important to the effectiveness of an organisation and so the
effectiveness of marketing strategy making processes is an important consideration for both academics
and practitioners. Various approaches have been made towards understanding and improving such
processes. This paper attempts to synthesise these perspectives to create a more rounded and deeper
understanding of how marketing strategies are made and how they might be improved. In short, the
findings of this work suggest: — that rational planning processes contribute to organisational
effectiveness. No reported methodology, however, is able to say more than that, and relatively little is
known about the value of the more commonly employed non-rational processes of strategy making —
that the content of strong marketing strategies is, to a useful degree, well defined by the extant literature.
This content definition is useful in evaluating the outputs of marketing strategy making processes and
offers a valuable alternative to attempting to correlate strategy making process with organisational outputs
— the normative, prescriptive models of strategic marketing planning are not an accurate description of
most practice. This suggests that, for many practitioners, the practical application of the process falls
some way short of the ideal — the effectiveness of normative strategic marketing planning is contingent
upon both internal and external factors, both of which are limited in the degree to which they can be
moderated by practitioners — the congruency hypotheses of Burrell and Morgan suggest a model by
which the effectiveness of marketing strategy making processes might be better understood and improved.

Company marketing strategy is an important and crucial constituent for the global market.
Marketing strategies can vary from country to country, brand to brand and organization to
organization. In order to achieve a satisfactory and adequate marketing strategy which has a
positive outcome on global and overall firm success, the marketing department within a company
should bear in mind all the different marketing mix strategies that can influence the
comprehensive result and the cumulative firm success. When launching a product into foreign
markets companies can use a conventional marketing mix or adapt the existing marketing mix, to
satisfy the country they are carrying out their business activities in. the link between
standardization/adaptation and company performance is complicated and possibly influenced by
other factors (Shilke, Reiman, Thomas, 2009, Solberg, Durrieu, 2008). It should be emphasized
that the influence of standardization/adaptation decisions of international marketing strategy on
company performance

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is named also as one of the most topical research objects of international business (Griffith,
Cavusgil, Xu, 2008). Therefore inconsistent results of empirical research works and limited
research contexts confirm that the link between standardization/adaption decisions of
international marketing strategy and company performance are a topical object of scientific
research (Ryans, Griffith, White, 2003, Theodosiou, Leonidou, 2003). International marketing
solutions become particularly relevant for enterprises that operate in a global business
environment and that look for survival or business development opportunities. Latterly more
attention is given to the link between international marketing strategy and company performance
in scientific literature on the subject of international marketing (Samiee, Roth, 1992; Cavusgil,
Zou, 1994; O’Donnell, Jeong, 2000; Katsikeas, Samiee and Theodosiou, 2006, Solberg, Durrieu,
2008; Shilke, Reiman, Thomas, 2009). Company performance is one of the most important
aspects when assessing the suitability of certain strategies (Jain, 1989). However, despite the
importance of international marketing strategy for company performance, the number of
scientific research works that analyse the mentioned link is limited, and results of the research
works are contradictory (Katsikeas, Samiee & Theodosiou, 2006.). By conducting etailed
literature review we will explore the concept of marketing strategy discussing its value,
consequently creating foundation for a conceptual model and empirical study.

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CHAPTER 2:
COMPANY ROFILE

2.1 Industry Overview

Initial Public Offer (IPO) is a process through which an unlisted company can be listed to a stock
exchange by offering its securities to the public. The objective of an IPO may differ from
company to company. It may be for expansion of existing activities of the company or setting up
of new projects or just to get its existing equity shares listed by diluting the stake of existing
equity shareholders through offer for sale or any other object as may be specified by the
company in its offer document. In an initial public offering (IPO), a private company becomes a
public concern by issuing equity shares to the outside investors for the first time. IPO is a process
through which companies access the capital market by selling a variety of securities, such as
common stock, bonds and preferred stock. Certainly, companies have other ways of financing,
such as retention of earnings; bank loans, overdrafts etc., but equity shares are the major source
of funding. IPOs often come from smaller, younger companies seeking capital to expand their
business. IPOs are quit risky to invest in. SEBI the capital Market regulator, which was
established with the objective of investor protection and regulation of capital markets has issued
many guidelines and introduced structural reforms to bring efficiency in the market and it, has
brought out various norms the companies have to adhere to before approaching the primary
capital market.

The public issue market in India is the widest avenue for companies to raise funds. The reason
being, they are able to do so without spending any of their own funds. This system helps
companies
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raise money without affecting their profit margins. The market has been liberalized and we can
see a rise in the number of companies seeking funds through the public issue.

The IPO market in India is booming as more and more companies are issuing equity shares to the
capital market. In the 1990s, with the introduction of the open market economy, the IPO market
went through policy changes, reforms, and restructurings. One of the most important
developments was being taken apart from the SEBI and being replaced with free pricing
mechanisms.

The market regulator, the Securities and Exchange Board of India, has permitted companies to
issue shares in the primary market at a price that they determine.

India has been going through it’s pinnacle in terms of new companies getting listed on the Stock
Markets. There has been a flood of companies wanting to capture the new market buzz of getting
public money. Also, the latest IPO’s of popular startups and companies like Zomato, Burger
King and Barbeque Nation has caused a stir among the young retail investors who are eyeing on
the making profits through the social leverage these companies exert to it’s customers and other
stakeholders.

Glimpse of IPO Markets in India and the world

1. The IPO Market in India experienced a boom in its activities in the year 1994
The reason for this boom were the liberalization of the economy in 1991, privatization in
1992, and demonetization of high-value currency notes in November 1993. The IPO
market has seen an unprecedented rise in the issue of shares of companies listed on
various exchanges over the last two years.

The share price of most companies listed on Indian stock exchanges have risen
tremendously since 1996 when it had crossed Rs. 100 at least for some companies like
Infosys (Rs. 745 on 8 February 1996), Wipro (Rs. 690 on 17 July 1996) and Tata
Consultancy Services (Rs. 870 on 10 June 1994).

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2. In the year 1995, the growth of the Indian IPO market was 32%.

The Indian IPO market grew fastest in the year 1995, when the Indian economy was
growing at a rate of 7.2 % a year. The growth in India's population, however, was only
1.4% a year during the same period. You can see that it is hard to explain this rapid
growth by saying that there were exciting new opportunities in the Indian economy to be
tapped.

There is something more fundamental going on here. In 1995, India was a late-comer to
the stock market. In 1995, all of its companies were tiny and unprofitable, and they had
little to offer prospective investors apart from the chance to buy them at a big discount
from what they would have cost if they had been started earlier.

The first public offering of an Indian company was made in 1993, and it was a minor
success: One company sold its shares at just over half the price it would have been able to
charge if it had been started earlier. In 1994, however, two more companies went public,
this time with much more promising prospects: They were listed at prices that were
several times as high as those offered in 1993, and their valuations increased further as
well after the IPO.

This happened because in 1994 India began liberalization, or deregulation of its

economy. This allowed its companies to start charging higher prices than before; it also
opened up new opportunities for investment outside of India itself, since foreign investors
could now get into stock markets around the world by buying shares of Indian companies
on international exchanges like the New York Stock Exchange (NYSE).

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3. The growth was halted with the South East Asian crisis.

The growth was halted by the South East Asian crisis. This was the biggest financial
crisis since the Great Depression, but it has not been written down as a disaster. The fact
that it happened is now so well-established that there is no point in denying it. But this is
not what people usually mean when they claim that the world economy fell off a cliff in
2008.

The global financial system worked better than ever before because it worked better at
hiding things from us. The banks were more opaque, because they had become
international, and because regulation had become looser. So the banks didn't seem to be
doing anything wrong. They were too big to fail, and they made money for shareholders,
but they seemed to be doing something useful for society. We didn't know what was
going on inside them, but we could see them working very hard to make money.

And then nothing worked anymore - including making money - and the system went into
meltdown.

4. The markets picked up speed again with the introduction of the software stocks.
The software stocks were a new way of buying things, not from people who had
something you wanted but from a computer that had a lot of them.

If the stock market had been a series of auctions, each day after the opening bell would
have been one more auction. One more day at the end of the week, and the stock would
be worth whatever it was going for then. If everybody else was going to buy it, that was
that.

But now you could buy what other people would pay for it, or you could just tell the
computer how much to pay for it. It was like having your own auction house, only
without needing to talk to anyone face-to-face. The prices came back faster than they
would have in an auction because there were so many more computers doing the bidding.
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2.2 Profile of Organisation

Fast Track Finsec is a well established financial institution based in New Delhi, India with
experience of 25 years in the financial market. It is a Corporate Member of all the major stock
exchanges, commodity exchanges, currency exchanges and also a depository participant ( DP )
with Central Depository Services (India) Limited (CDSL). The Group is doing business of
Equity and Derivative Broking, Commodity and Currency Broking and Depository Services.

Fast Track Finsec is a leading stockbroker company of North India and flows freely towards
attaining the diverse goals of their clients through varied services. It creates a plethora of
opportunities for its clients by opening up investment vistas backed by research-based advisory
services.

Serving the clients creates waves in his portfolio and empowering the investor who is prepared to
apply it in the interest of others” completely its ultimate goal. Fast Track Finsec is engaged in the
business of stocks and share broking and derivatives (future and options), depository services
etc. The Company has maintained its numero uno position in New Delhi in terms of turnover at
NSE.

Our History

The Company started its Journey way back on 30th August, 2000 as a Private Limited Company
under the Company’s Act 1956, by the name of Mantri Katta Share Brokers Private Limited in the
city of New Delhi. The company then changed its name to Mantri Share Brokers Private Limited in
the year 2003. The name was further changed to Fast Track Finserv in the year 2006.

Subsequently, In the year 2010, the status of the Company was changed and a fresh certifcate of
Incorporation was received from the Registrar of the Companies, New Delhi upon Change of name
and Conversion from Private Limited Company to Public Limited Company with the changed name
Fast Track Finserv w.e.f. 30.12.2010.

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The Company acquired membership of National Stock Exchange of India Limited (NSEIL) in 2001
for Capital Market and Future and Option (F&O) Segments. In year 2007 Fast Track Finserv acquired
BSE Membership for Capital Market and Future and Option (F&O) Markets.

In Year 2008 the Company acquired membership in Currency Segment of NSE, MCX-SX and in
Year 2010 in United Stock Exchange. In Year 2013 the Company acquired membership in Currency
Segment of BSE and Debt segment of NSE and BSE both. Futher the Company acquired membership
in Securities lending and borrowing scheme segment of NSE. The company also acquired
membership for Muli-Commodity Exchange in 2019.

Our Values

A true professional is one who adheres to ethical standards and is accepted by others as possessing
relevant knowledge and skills derived from research, education and training, and who is prepared to
apply it in the interest of others

● Provide clients with the most ethical financial services

● Be fair, empathic and responsive in serving our clients
● Strive relentlessly to improve what we do and how we do it
● Respect and reinforce our fellow employees and the power of teamwork
● Always earn and be worthy of our client’s trust
● Always believe in adding value to services we offer to our Clients

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Our Ethics

● Committed to providing the best customer services to meet our Customers’ needs
● Market our products and services in an honest and fair manner
● Do not compromise our values
● Do not use inside information about Maverick or other companies for personal proft or gain

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● Safeguard any confidential information entrusted to us

● Adhere to all laws and regulations applicable to our business

Our Presence

Our presence spans the length and breadth of the Stock Market, covering membership in BSE, NSE
and MCX-SX. We are also a depository participant with Central Depository Services (India)
Limited (CDSL), providing dual beneft services wherein the investors can avail our stock broking
services for executing the transactions and the depository services for settling them. The company
has full fedged branch network in New Delhi.

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Our Business

As a Broking House, the Company is doing Business of Secondary Market: Equity and Derivative
Broking, Currency Broking and depository Services.

2.3 SWOT Analysis

Strengths
The public equity markets have evolved over the past two decades and now offer:

- Direct access to all major exchanges from a single trading platform.

- Curated research reports and newsfeeds providing detailed analysis of the latest developments
in the industry.

- The ability to replicate orders across multiple exchanges via automated orders without manual
intervention.

- Access to a global network of liquidity providers that enables the execution of large orders at
competitive rates.

- Powerful technology at your fingertips. Our trading platform and tools allow you to make better
trading decisions.

- Being Client Centric, We have personalized our services to better cater to different categories
of clients Globally

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Weakness
- The business is facing obstacles in expanding nationally because it’s only established in its home
town=

- The current lack of awareness among customers can be attributed to a lack of aggressive
promotional strategies.

- The very little emphasis has been placed on retaining current customers

- The brokerage caters to the high-net-worth individuals leaving a large portion of retail investors.

Opportunities
- The demand for stocks is increasing every day, which makes it the most profitable market
today.

- Rural consumers are a great untapped market.

- Excellent opportunity for urban youth to earn passive income from the stock market.

Threats
- There is a strong negative sentiment in the market due to the economic slowdown and
pressure from stringent regulatory measures.

- Entry of new players in the retail broking industry is on a high, which has created a major
impact on brokerage firms.

- The recent rise of discount brokerage firms driving down the margins for full service
brokers.

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2.4 Competitor’s Profile

Nikunj Stock Brokers

NIKUNJ Group of Companies is a Fee Based Stock Broking House which has been in existence
for more than two decades. They are the Members of the Bombay Stock Exchange, National
Stock Exchange and as well as other Depositories

MISSION & VISION:

To provide fair and good services to small, retail, HNI and Corporate investors of India and the

whole Universe. Providing Integrated Financial Market Services with great Transparency, Trust,

and Confidence.

Management:
Mr. Pramod Sultania, MD and CEO, has a rich experience of more than 35 years in Banking,

Broking, Investment and allied Financial services. The management is run on professional lines

to deliver the best results. NIKUNJ Group is committed towards excellence in customer

satisfaction.

Gill Broking House

Gill Broking is one of the finest and prestigious commodity broking firms in India. With years of
experience and dedicated professionals, our firm has been able to build up and maintain its
reputation in the trading sector. Gill Broking believes in offering its clients the best service in
terms of trading in Commodity Exchange. As a matter of fact, with the use of latest and
advanced technology, we have been able to provide all our clients in fulfilling all of their
requirements. Anyone who is willing to take a step ahead and work with our firm will certainly
be able to avail the benefits that the company provides. We sure have some of the finest
professionals working with us to ensure proper and better-quality implementation of client’s
requirement.
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Their Values
Innovation

“Gill Broking” believe in offering the best quality of services to all our clients. Thus, we make
use of the best and sophisticated technology, ideas and tools to deliver our services at best

Quality Assurance Policy

We are steadfast in being the principal in furnishing top-notch product as well as services, which
surpasses the anticipations of our customers. This is accomplished by teamwork and a course of
uninterrupted development.

Speed

“Gill Broking” is one of the experienced investment firm fastest growing firms in the Indian
subcontinent. We not only deliver our services to the customers but we ensure to do so in fast
and in an efficient way.

Their Management
Gill Broking is a top Financial Service supplier in India, with the inheritance and knowledge to
create wealth for our customers. We draw stimulation from trust plus assurance that our
customers have in our dedication as well as performance and this is exactly what drives each and
every one of us at Gill broking to constantly surpass. In the past few years, we have produced a
holistic business atmosphere – loaded with perceptivities and capability to capitulate best
outcomes for our customers. We are committed to rendering a better-quality implementation
platform to the customer by continuously investing plus advancing our service delivery channels,
committing in progressive technology, and featuring the most active and motivated team that is
centred on improving the customers’ experience. Gill Broking is a member of the leading
Commodity Exchange in the country: MCX.
Our 4 pillar doctrines are: Faith - Simplicity - Technology - Ability

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Their Features
Gill broking offers trading and investing in numerous asset categories with one account which
assists our clients to program better. We have built our custom trading platform and Apps to
allow our users to continue on top of their portfolios anytime and anywhere.

STAR Finvest

STAR Finvest is a member of NSE, BSE & MCX and an NSDL Depository Participant for the
last 20 years. They began their operations in August 1999 and have become a well-known
broking firm in North India by living our values of trust, transparency and simplicity.

We adhere to the “Principle of Propriety”, and honour commitments in full letter and spirit. The
company stands promoted by Mr.S.K.Gupta, FCA, FCS, CWA, B.Com (Hons) SRCC. By virtue
of his world of experience in the capital market, immaculate skills, professional qualifications
and thorough understanding of the market, Mr. S.K.Gupta gives the company a unique
dimension benefitting one and all involved in the journey.

2.5 Problems of the Organisation

● Lack of awareness in people about the Equity Markets.
The lack of awareness in people about the Equity Markets is a serious issue and needs to
be addressed immediately. Unfortunately, even if people understand the fundamentals of
the stock market, the price they pay for stocks is not in sync with their understanding of
the business.

This mismatch between perception and reality leads to gross inefficiency in the markets.
The stock market is a complex system and there are multiple influencing factors that
determine the price of a stock.

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● Stiff Competition from Online Discount Brokers.

The most obvious threat to Full Brokerage Firms is the rise of Online discount brokers,
which began to emerge in the recent years. Now, with most brokerages offering
commission-free trading options and some offering free trading too, there are more
discount brokers than there are brick-and-mortar brokerages.

Discount brokers are targeting wealthier customers who want more comprehensive
financial services than they can get from a bank or mutual fund company. They make
their profit by selling commission-free mutual funds (which they often invest themselves)
and other investments with high fees to middle-class investors. As a result, the discount
broker industry is a highly competitive one — even discount brokers have a hard time
staying afloat.

● Heavy Pricing with low margins

Stockbrokers are getting squeezed by low margins, forced to compete with low-cost
rivals and exposed to more costly compliance. On top of that, the cost of securities
regulation has skyrocketed since the financial crisis, resulting in a huge increase in
regulatory spending.

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Chapter3:Literature Review

Definition of IPO:
Reasons for Going Public
The securities which the companies issue for the first time to the public either after
incorporation or on conversion from private to public company is called “INITIAL PUBLIC
OFFERING” or “IPO”. Company raising money through IPO is also called as “Company
● To raise funds for financing capital expenditure needs like expansion
diversification etc.
● To finance increased working capital requirement
● As an exit route for existing investors
● For debt financing.

Advantages of Going Public for the Company:

Stock Holders diversification:

As a company grows and becomes more valuable, its founders oftenhave most of its wealth tied
up in the company. By selling some of their stock in a public offering, thefounders can diversify
their holdings and thereby reduce somewhat the risk of their personal portfolios.

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Easier to raise new capital:

If a privately held company wants to raise capital a sale of a new stock, itmust either go to its
existing shareholders or shop around for other investors. This can often be adifficult and
sometimes impossible process. By going public it becomes easier to find new investorsfor the
business.

Enhances liquidity:
The sock of a closely held firm is not liquid. If one of the holders wants to sellsome of his shares,
it is hard to find potential buyers-especially if the sum involved is large. Even if a buyer is
located there is no establishes price at which to complete the transaction. These problems
areeasily overcome in a publicly owned company

Benefits of investing in IPO’s for the Retail Investors:

#1: Get in on the action early

By investing in an IPO, you can enter the ‘ground floor’ of a company with a high growth
potential. An IPO may be your window to rapid profit in a short time period. It may also help
grow your wealth in the long run.

Suppose, you invest in a young company that sells disruptive technology. If it manages to sway
the market and rake in profits, you would gain from its success too.

#2: Meet long-term goals

IPO investments are equity investments. So, they have the potential to bring in big returns in the
long term. The corpus earned can help you to fulfil long-term financial goals like retirement or
buying a house.

Besides, the Indian IPO market is growing. In 2017, the Indian stock market generated almost
$11 billion through IPOs[1].

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#3: More price transparency

The price per security issued is clearly mentioned in the IPO order document. So, you have
access to the same information as bigger investors.

This would change in the post-IPO scenario. The share prices after the IPO would depend on
changing market rates and the best price that the stockbroker can offer.

#4: Buy cheap, earn big

The IPO price is often the cheapest price if you invest in a small company that has the potential
to grow big. That is because the company may offer a discounted rate. If you miss the IPO
window, investing in that promising company may be difficult because the stock price may
skyrocket.

You don’t believe it? Let’s taken Amazon’s example. When Amazon.com Inc. floated an IPO in
1997, each share was priced at $18. Had you invested $5,000 in Amazon’s IPO, your shares
would have been worth $2.5 million in April 2018

These stories of riches don’t end with Amazon. Let’s look at some of the jaw-dropping success
stories, all thanks to the IPO.

Factors affecting decision making of Investors in IPOs

Crucial Lookout points while Investing in IPO’s

● Risk factor

No investment is free of risk. Even your fixed deposit in a public sector bank is not
absolutely safe. So, if you are investing in an IPO, be prepared to deal with some degree
of risk. Keep in mind that the company floating an IPO has so far been privately owned.
It may have a potential for growth, but that is no guarantee of future success in the sector
within which it operates.

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● Risk appetite
How much risk can you take? If your initial answer is very little, think again. Assess your
financial situation, your liabilities, age, and other concerns. This will help you decide
how much risk you can afford to take.

● Reason for raising funds

Every investment bank publishes a prospectus for the IPO being floated. Go through the
prospectus with care. The prospectus will mention why the company is raising funds. If it
is for expansion, that is good news. If it is for paying off debt or purchasing shares from
the owners, be careful. It could be risky to invest in such company. If a company cannot
pay its debt without raising funds from the public, it may not do well in future, too.

● Hard-selling by brokers
An IPO almost never comes directly to retail investors. If it is freely available, it probably
means that the institutional investors who were initially approached by the investment
bank passed on the opportunity. Take it as an indication of the company's financial health
and prospects.

● Available information
It is difficult to get much information about a company that is yet to be listed. So, it may
be a bit tricky to find out exactly where a particular company stands. Although the
company’s IPO prospectus gives out details about its assets, liabilities, overall financial
situation, and growth prospects, you should look for reports and analysis by third parties
in newspapers, magazines, journals, and online. Keep searching to find out details that
the prospectus would never tell you.

● Lock-up period
Find out about the lock-up period, if any. Existing investors in the company may not be
able to sell their shares before the mandatory lock-up period ends. So, it may be difficult
for you to gauge whether the stock these investors hold has as much value for them as the

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IPO price. It could be that once the lock-up period ends, these investors would dump their
shares in the market. This may cause the price to plummet. So, it may be wise to put off
investing in the company till the lock-up period is over.
● The initial excitement
The Facebook IPO is an interesting case in point. In 2012, Facebook announced its
IPO with much pomp. The price shot up significantly right after the market opened.
But the initial excitement did not last long. The stock traded just above the IPO price at
the closing of the first day. And the stock value fell for nine of the next 13 days. So, it
may be wise to let the market settle before reaching for your wallet.

Public Perception about IPO’s in India

Initial Public Offering is considered to be the most outstanding matter for a firm. If a company,
“being public” is just as foremost as “going public.” Small and new companies normally issue
IPOs when they are in need of capital, but occasionally large companies also issue them for
public trading. The company considered it a big commitment to be going public. The company
way of doing business is going to be affected by this process of IPOs’. But offering an IPO is
very vapid and more time is required for this. SEBI, from May 1, 2007, the Indian stock market
regulator made it compulsory that all IPOs must be graded by a credit rating agency. But in a
very short span of time, it was made optional by SEBI in 2013.

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Chapter 4:
Objective and Research
methodology

4.1 Objectives of Study

● To check the awareness level of young investors.

● To study the attitude of young investors when applying in an IPO.
● To assess the effective strategies used by the young investors to book profits.
● To study the factors taken into consideration by the young investors when applying in an
IPO.

4.2 Scope of the Study

The scope of study is to analyse the effective strategies which can be used by the young
retail investor to book profits when buying an IPO. It is to be noted that young retail
investors, by and large, are not very well informed and all the more so when it comes to
handling investment banking transactions.

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IPOs are considered as one of the major avenues for generating wealth for the retail
investor. However, the role played by the young retail investor in IPOs is very limited.
The retail investors have very limited knowledge when it comes to buying an IPO. The
retail investors rely on their broker for buying an IPO and on the basis of his advice, they
proceed with the purchase. The retail investors are not aware of the risks involved.

● This study is useful for the researchers who are trying to understand the ways
young investors go for their decision when buying an IPO?
● This study can also help the investors who are first time buying an IPO. It will
reduce their risk element and help them gain more profits.
● It is necessary for people who are providing training in the stock markets as this
will help them gain the real psychological dilemma new investors face and also
curate the course content as to better understand and suit the retail investor needs.
● It will help the stock broking companies as they will be able to better assist the
investors when they apply for the IPO.

4.3 Significance of Study

This study is not only beneficial for the investors who are applying first time for the
IPO’s but this includes all the stakeholders who are at the different segments in the strata
in which IPO market operates. As India is seeing lots and lots of IPO’s happening, it is
crucial for investors to hold onto each one as loosing a major IPO can mean huge loses
for the investors who are just starting out.

When retail investors loose in the markets, just they just loose money but an hope and
misery that markets are never meant for them. This can prove to be fatal as this means the
investors are loosing their biggest opportunities in being invested in the Equity market.

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4.4 Methodology

Sample Size

The sample size is a term used in market research for defining the number of subjects included in
a sample size. By sample size, we understand a group of subjects that are selected from the
general population and is considered a representative of the real population for that specific
study.

The correct choice of the number of subjects in a sample size is very important because this
variable will determine the quality and also the statistical significance of the study. If we choose
a sample size that is too small, we will not get accurate results and we might get false positives
regarding to our hypotheses. On the other hand, if we select a sample size that is too big, we
might waste time and money and also get an inaccurate result.

For example, if we want to predict how the population in a specific age group will react to a new
product, we can first test it on a sample size that is representative of the targeted population. The
sample size, in this case, will be given by the number of people in that age group that will be
surveyed.

We have targeted the students who are taking the onlines classes from FasTrac Finsec and are
also the customers of the company. There are many courses offered by them for various
proficiency stages. We have selected the one group which are taking advanced courses. They

know the basics of investing and majority people have already invested in secondary markets as
well as in IPO’s. The Sample Size of our project report is 60.

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Data Methodology techniques

Data collection is defined as the procedure of collecting, measuring and analyzing accurate
insights for research using standard validated techniques. A researcher can evaluate their
hypothesis on the basis of collected data. In most cases, data collection is the primary and most
important step for research, irrespective of the field of research. The approach of data collection
is different for different fields of study, depending on the required information.

Data collection allows the desired data to be gathered. It is the process of gathering information
for research purposes. Proper data collection methodology can allow us to know how big or
small the population is, who are the individuals, what are the characteristics of these individuals,
and categorizing them.

The most critical objective of data collection is ensuring that information-rich and reliable data is
collected for statistical analysis so that data-driven decisions can be made for research.

Primary Method

1. Primary Data: It is a term for data collected at source. This type of information is obtained
directly from first hand sources by means of surveys, observations and experimentation and not
subjected to any processing or manipulation and also called primary data. Primary data means
original data that has been collected specially for the purpose in mind.It means someone
collected the data from the original source first-hand. Primary data has not been published yet
and is more reliable, authentic and objective. For example population census conducted by the
government of India after every 10 years.

2. Secondary data: It refers to the data collected by someone other than the user i.e. the data is
already available and analysed by someone else. Common sources of secondary data include
various published or unpublished data, books, magazines, newspaper, trade journals etc.

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Chapter- 5: DATA
ANALYSIS
Survey regarding investing pattern of new retail investors in an IPO
1. Have you ever invested in the equities market?

Yes 95% 57

No 5% 3

Table 5.01

Fig 5.01

According to the survey, 57 respondents had invested before in stock markets while only
3 respondents have not invested in the stock markets.

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2. Have you ever invested in an IPO of a company?

Yes 87.7% 50

No 12.3% 7

Table 5.02

Fig 5.02

According to the Survey, 50 respondents had invested in an IPO while 7 respondents had
not invested in an IPO.

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3. Have you ever bought an IPO on monetary leverage?

Yes 14% 7

No 86% 43

Table 5.03

Fig 5.03

According to the Survey, Only 7 respondents had bought the IPO on leverage while the
other 43 respondents didn’t prefer to buy the IPO on leverage.

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4. Do you properly assign your risk factors before applying to the IPO?

Yes 68% 34

No 32% 16

Table 5.04

Fig 5.04

According to the Survey, 34 respondents had properly assessed their risk factors before
applying to the IPO while only 16 respondents didn’t assess risk factors before applying
to the IPO.

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5. Do you also go through the DRHP of the company before buying the IPO?

Yes 44% 22

No 56% 28

Table 5.05

Fig 5.05

According to the Survey, Only 22 respondents go through the DRHP document before
buying the IPO while 28 respondents do not go through the DRHP document before
buying the IPO.

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6. Do you look at the shareholding pattern and the subsidiaries of the company before
investing in it's IPO?

Yes 22% 11

No 78% 39

Table 5.06

Fig 5.06

According to the Survey, Only 11 respondents researched on the shareholding pattern and
the subsidiaries of the company while 39 respondontents didn’t research about it.

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7. Do you rely more on Self research or on other people’s tips while deciding to buy the IPO?

Yes 66% 33

No 34% 17

Table 5.07

Fig 5.07

According to the Survey, 33 respondents relied on the their own self research while
deciding to buy the IPO while 17 respondents relied more on other people’s tips to buy
the IPO.

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8. Have you ever bought an IPO based on it's hype in the market rather than your own
thorough research?

Yes 48% 24

No 52% 26

Table 5.08

Fig 5.08

According to the Survey, 24 respondents had bought the IPO on the basis of it’s hyper in
the market while other 26 respondents preferred to buy the IPO based on their own
thorough research.

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9. Do you consider the shareholding pattern of promoters and underwriters after the IPO
will be launched in the market?

Yes 6% 3

No 94% 47

Table 5.09

Fig 5.09

According to the Survey, Only 3 respondents looked for the shareholding pattern of
promoters and underwriters after the IPO will be launched amd other 47 respondents
didn’t go through this much depth about the shareholding pattern of promoters and
underwriters.

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10. Do you prefer listing gains or long term profits while buying an IPO?

Listing Gains 60% 30

Long Term Profits 40% 20

Table 5.10

Fig 5.10

According to the Survey, 30 respondents bought IPO’s for listing gains while 20
respondents bought IPO’s for Long term Profits.

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11. Do you also look at the underwriters and investment bankers involved in launching
company's IPO before buying the IPO?

Yes 26% 13

No 74% 37

Table 5.11

Fig 5.11

According to the Survey, 13 respondents looked at the underwriters and investment bankers
involved in launching company's IPO and 37 other respondents didn’t look about

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12. What factor is most crucial when deciding to buy an IPO?

Lot Size 74% 37

Share Price 44% 22

Price in Grey Market 14% 7

Table 5.12

40

35

30

25

20

15

10

Lot Size Share Prie Price in Grey Market

Fig 5.12

According to the Survey, 37 respondents chose that share price is the crucial factor to buy
the IPO, while 22 consider the lot size while only 7 consider the price in the grey market
to be very important.

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13. Do you also consider the proportion of Offer for Sale (OFS) with Fresh Issue?

Yes 30% 15

No 70% 35

Table 5.13

Fig 5.13

No, 70%

YesNo

According to the Survey, 35 respondents do not consider the proportion of Offer for Sale
(OFS) with Fresh Issue while only 15 respondents do

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14. Do you consider the key financial metrics of the company like revenue growth,
profitability, ROI etc. while buying the IPO?

Yes 90% 45

No 10% 5

Table 5.14

No
10%

Yes 90%

YesNo

Fig 5.14

According to the Survey, 45 respondents study the key financial metrics of the company
like revenue growth, profitability, ROI etc. before buying the IPO while 5 did not.

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15. Do you also factor the public sentiments towards the company before buying the IPO?

Yes 48% 24

No 52% 26

Table 5.15

Yes
No 52% 48%

YesNo

Fig 5.15

According to the Survey, only 24 respondents factor the public sentiments towards the company
before buying the IPO while 26 do not.

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CHAPTER- 6:

FINDINGS AND
CONCLUSION
Findings

● 86% of respondents hadn’t bought the IPO on monetary leverage while only 14% did.
● 68% of the respondents had properly assessed their risk factors while 32% had not.
● Only 44% of respondents go through the DRHP document before applying for the IPO
while 56% do not.
● 78% of the respondents research on the shareholding pattern of the company while 22%
respondents do not do it.
● 66% of the respondents relied on their own market research while 34% respondents relied
on other people’s advice to invest in an IPO.
● 48% respondents had bought the IPO based on it’s hype while 52% people respondents did
their thorough research to buy an IPO.
● Only 6% of respondents looked for the shareholding pattern of promoters and underwriters
after the IPO will be launched amd other 94% didn’t look to this detail.
● 40% of the respondents bought IPO’s for listing gains while 60% of the respondents bought
it for long term profits.
● 26% of the respondents looked at the shareholding pattern of underwriters while 74%
hadn’t.

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Suggestions

● Fastrac Finserv should focus on making a more inclusive and diverse curriculum and also
educate new investors about the intricacies of investing in IPO. They must be equipped
with detailed knowledge of the investing pattern they are going to pursue.
● DRHP and the importance of other important documents as well as a detailed report with
the company info must be communicated to the investors.
● Companies must include both the prospects for the listing gains as well as long term
benefits of entering in the particular IPO trade.
● Risk factor is an important aspect every investor should ascertain before investing.
Brokers need to help the investors properly assess the risk factor involved while applying
for the IPO. Investors should be provided with flexible leveraging options.
● Investors should be taught the comparison of OFS with Fresh Sale to accompany better
financial decisions.

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CHAPTER-7:CONCLUSION

We have gone through and assessed a number of factors which the new retails investors entails to
while subscribing the IPO, it will be in their best interest if they follow the recommendations
covered in this project report.

The findings of this report are not obnoxious and can easily be used by the new investors
entering in the IPO market. We do not contend that these findings are exclusive and have the
premiere etiquette, it stills sets a tranquil way for the investors to start the IPO journey.

The study also tries to determine whether these IPOs were underpriced in short run and identifies
various factors that influence the movement of such IPOs in the short run.

The study found that about 70 per cent of the IPOs are underpriced in short run and the
movement of these IPOs in short run is not influenced by the age of the company, issue size of
the IPO, ownership sector and the promoter’s holdings after the issue.

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Annexure

Questionnaire

1. Have you ever invested in equities market?

Yes

No

2. Have you ever invested in an IPO of a company?

Yes

No

3. Have you ever bought an IPO on monetary leverage?

Yes

No

4. Do you properly assign your risk factors before applying to the IPO?

Yes

No

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5. Do you also go through the DHRP of the company before buying it's IPO?

Yes

No

6. Do you look at the shareholding pattern and the subsidiaries of the company before
investing in it's IPO?

Yes

No

7. Do you rely more on Self research or on Expert's advice while deciding to buy the IPO?

Yes

No

8. Have you ever bought an IPO based on it's hype in the market rather than your own
thorough research?

Yes

No

9. Do you consider the shareholding pattern of promoters and underwriters after the IPO
will be launched in the market?

Yes

No

10. Do you prefer listing gains or long term profits while buying an IPO?

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Listing Gain

Long Term Profits

11. What factor is most crucial when deciding to buy an IPO?

Lot Size

Share Price

Price in Grey market

12. Do you also look at the underwriters and investment bankers involved in launching
company's IPO before buying the IPO?

Yes

No

13. Do you also consider the proportion of Offer for Sale(OFS) with Fresh Issue?

Yes

No

14. Do you consider the key financial metrics of the company like revenue growth,
profitability, ROI etc. while buying the IPO?

Yes

No

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15. Do you also factor the public sentiments towards the company before buying the IPO?

Yes

No

Bibliography

Internet:

● www.justdial.com

● www.moneycontrol.com

● www.investopedia.com

● www.ftfinsec.com

● www.wikipedia.com

● www.finnanceguru.com

● www.sptulsian.com

● www.valueresearchonline.com

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Tables

Table Name Page Number

Table 5.01 26

Table 5.02 27

Table 5.03 28

Table 5.04 29

Table 5.05 30

Table 5.06 31

Table 5.07 32

Table 5.08 33

Table 5.09 34

Table 5.10 35

Table 5.11 36

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Table 5.12 37

Table 5.13 38

Table 5.14 39

Table 5.15 40

Figures:

Figure Name Page Number

Fig 5.01 26

Fig 5.02 27

Fig 5.03 28

Fig 5.04 29

Fig 5.05 30

Fig 5.06 31

Fig 5.07 32

Fig 5.08 33

Fig 5.09 34

Fig 5.10 35

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Fig 5.11 36

Fig 5.12 37

Fig 5.13 38

Fig 5.14 39

Fig 5.15 40

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