Thread by @caswapnilkabra

One of the major reason why the recent IPOs saw such huge listing gains is the fact that they are massively oversubscribed on the last day by HNIs and QIBs who end up pumping the Grey Market Premium.
A small thread to explain the same 🧵👇

#MrsBectorsFoodIPO #burgerkingipo

1. HNIs and QIBs are smarter than us, the retailers. The reason is simple, retail investors get shares on the basis of lottery system. So, your chance of getting an allotment as a retail investor purely depends on luck.

2. However, that’s not the case with HNIs. They get shares on a proportionate basis. Hence, if the HNI quota gets oversubscribed 100x then an HNI will get 1/100x shares.

3. HNIs use this opportunity by borrowing money for a short time (7-10 days). They pay interest for this time and sell the shares near listing, thereby cashing in the opportunity.

4. That is the reason you see huge subscription numbers on the last day (to save interest cost).
Look at these numbers of Burger King!

5. Also, have a look at the third day numbers of Mrs Bector's IPO.

6. The buzz they create pumps up the GMP and hence we see huge listing gains. Retail investors who were not lucky enough to get an allotment then jump to buy shares on the listing day! FOMO, you may say.

7. But then, the share price falls after sometime as we see the noise fizzling out. This happened today in case of Burger King.

8. People who were buying Burger King citing reasons of growth ahead today were selling the same as we saw the shares locking at Lower circuit!

9. In a bull market, even a slightest of justification can make a share touch sky.
Retail investors, beware!

10. Here's another thread where I explained in detail the case of Chemcon.

https://twitter.com/caswapnilkabra/status/1312041674600742912?s=20