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At present, there is a boom in the IPO market. Therefore, banks are busy making short-term profits. This has been revealed in a recent report of market regulator Securities Exchange Board of India (SEBI).
There are about 80 percent of banks that sell the stocks allotted for IPO within the first week of listing and make short-term profits. This strategy of banks is due to short-term profits. Experts say that banks benefit from the immediate surge in stock prices after listing.
The SEBI report said that between April 2021 and December 2023, 75 per cent of IPOs had positive returns on the first day of listing. Not only this, there were about 26 IPOs which gave a return of more than 50 per cent on the first day of listing. The trend of making profits after the first day of IPO listing is not limited to banks. Investors booked initial profits due to attractive returns. If we talk about the attitude of retail investors in this regard, it was observed that such investors sell half of the shares allotted in the IPO within the first week of listing. Which shows that investors are more hungry for short-term profits.
Experts say that the strategy of banks is to allocate funds only for short-term gains. Therefore IPO is the best option for them. This is a business decision of the management of banks. Apart from this, sometimes banks enter into corporate partnerships with IPO companies. Which is related to working capital or line of credit. At such times, banks also create equity positions for the short term. Which can strengthen the market launch of the company. Banks see this as the lowest risk opportunity to support their customers.