Mistake 1: Applying Based on GMP Alone
Grey Market Premium is a useful sentiment indicator, but it's also easy to manipulate. Several IPOs with high GMPs have listed flat or below issue price when institutional demand didn't match retail hype. Always combine GMP with subscription data and fundamentals before deciding.
Mistake 2: Ignoring the Offer for Sale Proportion
When a large chunk of the IPO is an Offer for Sale (OFS), existing shareholders — not the company — receive the proceeds. This dilutes the growth story. A company raising fresh capital for expansion is fundamentally different from one where promoters are cashing out.
Mistake 3: Not Approving the UPI Mandate in Time
This is perhaps the most avoidable mistake. After submitting your IPO application, your UPI app sends a mandate request that must be approved before 5 PM on the closing day. Many investors miss this and lose their application entirely. Always check your payment app within minutes of applying.
Mistake 4: Overallocating Capital to a Single IPO
Putting a large portion of your investable capital into one IPO — especially a speculative one — violates basic portfolio management principles. IPOs are inherently binary: you either get allotment or you don't. Spread your applications across multiple quality IPOs rather than concentrating on one.
Mistake 5: Holding Weak Listings Hoping for Recovery
Anchoring to the issue price is a cognitive bias that costs investors dearly. If a stock lists below issue price and your pre-planned stop-loss is hit, exit. Some weak-listing stocks have taken years to recover — or never did. Pre-plan your exit level before listing day.
Mistake 6: Ignoring the Subscription Category Breakdown
An IPO might show 50x overall subscription, but if QIB (Qualified Institutional Buyers) subscribed only 2x while retail subscribed 100x, it's a warning sign. Institutions have more resources to analyze companies — low institutional interest despite high retail enthusiasm deserves scrutiny.
Mistake 7: Applying for Every IPO
Selective investing beats indiscriminate applying. Every application requires a UPI mandate, blocks capital for 6–7 days, and carries allotment risk. Focus on IPOs where you've done research and have genuine conviction. Quality over quantity applies to IPO investing just as it does to any other form of investing.