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Is Buying IPOs on Listing Day a Winning Strategy? A Reality Check

27 Mar, 2026

4 mins read

is buying ipos on listing day a winning strategy

The Indian stock market has recently witnessed an unprecedented number of IPOs hitting Dalal Street in 2025. Some grabbed headlines for massive subscriptions, while others stood out for their huge listing premiums.

For many retail investors, the story follows a familiar pattern: you apply for an IPO, hope for an allotment, but end up empty-handed due to heavy oversubscription. As you watch the stock soar on its first day of trading, a pressing question arises: "Is it too late to enter? If it's listed at such a high premium, is there still more upside left?"

In this article, we will break down whether buying an IPO on the listing day is actually a profitable strategy.

The Great IPO Rush of 2025

The year 2025 was a landmark for the Indian primary market, which is not continuing this year. India emerged as a global leader in public offerings, launching a record 367 IPOs. This surge enabled the Indian market to surpass major global hubs such as the United States, China, Hong Kong, and South Korea in listings.

However, quantity does not always equate to quality for the secondary market buyer.

Out of the 104 mainboard IPOs we tracked:

71 stocks listed with positive gains
21 stocks listed at a discount
12 stocks saw a flat listing.

IPOs like Highway Infra and Urban Company led the pack with massive listing gains of 64% and 57%, respectively. While these numbers look great for those lucky enough to get an allotment, the picture changes drastically for those who bought shares from the open market on Day 1.

Scenario 1: The Blind Entry Approach

In this scenario, imagine you decided to buy every single mainboard IPO on its listing day, regardless of the sector, valuation, or premium.

The Opening Price Entry

If you had purchased these 104 stocks near their opening price on listing day:

Only 34% of the stocks would be in profit as of February 23, 2026.
A staggering 66% of these stocks would be trading at a loss.

The Closing Price Entry

Some investors argue that the opening minutes are too volatile and that it’s better to wait for the market to settle. However, the data suggests this doesn't help much. Even if you wait and buy near the closing price of the listing day, 66% of the stocks would still be in the red.

To understand this better, imagine if you had bought just one share of every mainboard IPO at its Day 1 closing price. By February 23, 2026, your portfolio would be sitting on a net loss of around ₹2,000. Even with the benefit of diversification across 104 companies, the strategy failed to create wealth.

Scenario 2: Chasing the Winners

A common logic among traders is to follow the "strength." The thinking is: "If a stock lists at a high premium, it means demand is high and institutional investors are interested, so the momentum should continue."

We tested this by filtering only those IPOs that listed at a premium and ignoring the discounts and flat listings, and the results were surprising.

Whether you bought at the opening or closing price, approximately 62% to 65% of these premium-listed IPOs resulted in a loss by February 23, 2026. A high listing premium is often a reflection of past demand that is during the subscription period rather than a guarantee of future performance.

Scenario 3: The Positive Momentum Filter

What if we only bought stocks that showed strength during their first day of trading? Here, we only look at stocks where the closing price was higher than the opening price, indicating intraday buying interest.

The "Green Day" Filter

There were 50 IPOs that managed to close higher than they opened on Day 1. You might expect these to be a great strategy, but 74% of these stocks are currently trading at a loss as of February 23, 2026.

The "High Momentum" Filter

Let’s get even more specific. What if we only bought IPOs that rallied at least 5% during their listing day and held onto those gains until the close? Surely these strong performers would sustain their momentum? However, out of the 29 IPOs that met this criteria, over 72% are currently in a loss position as of February 23, 2026.

The Bottomline

Wealth isn't built by chasing green candles on a listing screen. It is built by understanding valuations, analysing business quality, and practicing disciplined allocation. If you didn't get an IPO allotment, it is better not to chase it on Day 1. Wait for the "listing dust" to settle, watch it either by having a proper framework or by analysing the first couple of quarterly results, and enter when the price aligns with the company's actual value.

Remember, the legendary Warren Buffett once said, "The stock market is a device for transferring money from the impatient to the patient."

Eligible investors can apply for the IPO through ASBA-enabled brokers, including via the FYERS platform.

Disclaimer: This blog is for educational and informational purposes only and does not constitute investment advice. IPO investments are subject to market risks. Conduct your own research or consult a financial advisor before applying.