[Music] this is how several retail Traders start their mornings they wake up in anticipation as the Market opens their screens come to life for hours they remain glued to their stock trading portals hunting for the next big opportunity and once they find it they Place their bets if the stock price climbs the BET has paid off and the market keeps them hooked once they see a profit they keep coming back to their trading apps over and over again this is called stock trading but increasingly it's borderline gambling for a lot of retail investors the lines
are blurred and they're hooked on to a new trend these days thanks to the latest wave of IPOs before we discuss it let's get a basic question out of the way what is an IPO it stands for initial public offering IPO when a company lists a stock lists on a stock exchange when a company enters the market for the first time it offers its shares to the public and the first such offering of shares is called an IPO initial public offering and Retail investors find it very appealing they see an IPO as a next big
money-making opportunity we have a recent example this week Bajaj Housing Finance made its debut this is a financial services company it gives out loans to buy properties Bajaj had a bumper listing in India its IPO was over subscribed by 64 times now what does that mean what is an over subscription it means that there were far more buyers than the shares on offer if Bajaj was offering 100 shares there were 6,400 buyers in other words for every share that Bajaj had to sell there were 64 buyers the total bids were worth of whopping $39 billion
obviously Bajaj could not take all this money it did did not have shares worth $39 billion to offer it wanted to raise just about 782 million so the IPO was over subscribed now when this happens the available Shares are divided proportionally among all investors so all those who applied to buy baj shares will end up getting some shares but far less than what they wanted for example if you wanted 10 shares you might end up with just two or three it would depend on on demand and Supply the more an IPO is over subscribe the
fewer shares you'll get and that's what happened with Bajaj they went public yesterday with a bank overnight the company's value has more than doubled before the listing Bajaj was worth $7 billion after the listing the company's value has jumped to $16 billion and that also means massive gains for investors during the IPO one share of Bajaj was priced at at around 70 rupees today it was trading at around 180 rupees so what you bought for 70 rupees yesterday you can sell for 180 rupees today look at the spike in value Bajaj is India's fourth biggest
major listing now and this has been the trend this year 2024 has been a big year for IPOs in India more than 200 companies have gone public in the last8 months they've raised over 8 billion by selling their shares to investors and this IPO frenzy is far from over there are more listings in the pipeline including some high-profile names like delivery aggregator swiggy Electronics giant LG and car maker Hyundai the Indian units of LG and Hyundai are going public as of now they're privately held when they go public they raise money from the stock market
and how much money are they looking at each IPO could be worth over a billion dollars Global Investors are tracking all of this last year India became the world's second largest IPO market right behind mainland China meaning India is an it's an attractive investment destination for the world as more companies enter the field India stock markets are also expanding in size they're challenging their glob Global peers it's a good Trend a trend worth building on but here's the other side of the story it features the retail investors the ones I spoke about in the beginning
their appetite for risky bets is growing they see the stock market boom as an opportunity to make quick money and some are even risking their savings and suffering losses because of it India's Market regulator recently conducted a study that's sebbi the Securities and Exchange Board of India it's the market regulator they held a study and the fin are quite revealing most retail investors sell their IPO shares quickly 54% of the investors sell their shares within a week 70% sell them within a year so they're not buying into these IPOs for the long term and this
kind of trading has seen a surge we have some more data about a third of individual investors trade on an intraday basis meaning if they buy a stock they sell it on the same day before the market closes that's intraday trade in 6 years back just 1 and A2 million traders in India did this 1.5 million Traders did intraday trading last year the number of intraday Traders shot up to a whopping 6.9 million now most of these Traders are young 48% of them are below 30 years of age and most of them are losing money
last year 7 out of 10 Traders lost money in intraday trading that's 70% of them losing money what do these numbers tell you this is not trading it's gambling and the government of India agrees with this assessment it says and I'm quoting a gambling Instinct has gripped retail investors The Regulators are trying to build more guard rails to protect the retail investor in India but clearly a lot more needs to be done the thing is Indian markets are growing and Retail investors are maturing which is all good but stocks are instruments to build long-term wealth
it is not a shortcut to instant riches especially if you don't know what you're doing and this kind of trading also poses a threat to Market stability a surge in such trades could steer the market away from generating wealth for its investors and turn it into a casino this is a long-term risk and it cannot be ignored e
