Hi friends, last time I had written about Reliance Power IPO on the day when the issue opened up.

Today, India's Sensitive Index fell the most in three weeks after billionaire Anil Ambani's Reliance Power Ltd. slumped on its first day of trade.

Typically, an IPO is the only time at which the share value of a business is fixed.  A business has to go through a number of steps prior to IPO to establish its long term security, and the launch price of the stock will be determined by economists and accountants in order to strike the best balance between the amount of money the business needs to raise, and its actual value, which relates to its assets and profit forecasts. It is really difficult to gauge the listing price by investors in spite of a number of indicators available for it. The Reliance Power can be seen as one of the example.

In the case of large businesses, their IPO is a high profile event, which generally attracts a large number of institutional fund managers as well as smaller private investors to put their money into the business. Regarding the Reliance IPO, there was good amount of exuberance among the investors about this issue. Firstly there was a good hype among the investors about Reliance Group and secondly the market was not under the present circumstances. In fact the Reliance power IPO had come at the time when investors were inclined for every other IPO having better prospects which may be because of the group’s past standing in the business world or the IPO belonged to a particular sector destined to grow.

During the present scenario of stock market, Power sector issues must be held for a longer period. These shares should not be considered as a short time investment. The investors who wanted to gain from the Reliance Power listing may have been disappointed from the IPO listing price. If it is retained for 2-3 years, it may yield good returns. . I hope this particular share will come up to the expectations of investors once the market gets settled from these daily big fluctuations to steady state.

On the whole, provided you are able to adopt a flexible and fluid approach to investment, and can put money in at a time that suits you, as well as having the ability to get out at the right time, investing in an IPO need not be a high risk move, and can offer significant rewards, however, this requires the ability to see beyond the marketing and recognize potential for growth and losses, as well as doing the research to back up your decision making process.