There are numbers of strategies or ways, which investors are using to make investment in equity markets for the better returns on their investments. Some take investment call on fundamentals basis other make on technical and more.
Legendary stock picker Peter Lynch once said, “Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it.”
But is investing in the stock market that easy? Well, it can be both. There are a number of routes to the path of investing, each having its own pros and cons. Some take investment calls on fundamental analysis while others rely on technical calculations.
One of the popular modes of investment among investors has been the IPO route. But does investing in IPOs really feasible? So far the year 2011 saw many IPOs making their debut on the bourses but with mixed response.
A quick check of the data shows that any investor, just sticking to IPOs for investment in 2011, would have made a return of a cool 20% (net), year-to-date (YTD).
YTD in 2011, 17 companies have approached the capital markets with their IPOs. If an investor had made investment of Rs 10,000 each in those IPOs, i.e. Rs 1,70,000, then the net return on this investment would be Rs 2,02,966 (appx gains over 19%).
In the same period, the Sensex has given negative return of 17%. (From January 01, 2011 to May 31, 2011)
Further analysis of the data reveals, out of 17 IPOs, till date 10 IPOs have given negative returns.
Data shows, in the last five year, the Sensex gave its highest return at 76% in 2009. This was the year when IPOs were in short supply.
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