Are IPO Investments Safer for Retail Investors in 2026?
In 2026, investing in an Initial Public Offering (IPO) can be a great way to grow your money but it is not necessarily safer than buying regular stocks. While the Indian government and SEBI have introduced many rules to protect retail investors, every IPO still carries the risk that the stock price might fall on the first day. At Motilal Oswal we believe that an IPO is only safe if you have researched the company’s background and checked if the price is fair.
What is an IPO?
An IPO is when a private company decides to sell its shares to the general public for the first time. The company does this to raise money for things like paying off debt, building new factories or expanding into new cities. As a retail investor you get a chance to become a partner in the company right at the start of its journey on the stock exchange.
Why IPOs Feel Safer in 2026
Compared to ten years ago the process of buying IPOs in India has become much more transparent and secure for the average person.
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Better Rules from SEBI
The market regulator (SEBI) has made it harder for bad companies to launch an IPO. Companies must now provide very clear details about how they plan to use your money. They cannot just say they want money for general purposes; they have to be specific.
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The Lock-in Period
In 2026 there are stricter rules for the people who owned the company before the IPO (the promoters). They are often not allowed to sell their own shares immediately after the company goes public. This prevents them from dumping their shares and causing the price to crash.
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ASBA (Application Supported by Blocked Amount)
This is a technology that makes your money safe. When you apply for an IPO through the Motilal Oswal app the money doesn't leave your bank account immediately. It is simply blocked. If you don't get the shares (allotment) the money is unblocked instantly. This removes the risk of waiting weeks for a refund.
The Risks: Why an IPO is Not a Guaranteed Profit
Many people think that an IPO always results in listing gains (making money on the very first day). This is a dangerous myth. Here is what could go wrong:
1. Overvaluation (The Expensive Trap)
Sometimes a company is great but the price they are asking for is too high. If the IPO is overpriced the stock might start trading at a discount (lower than the price you paid). At Motilal Oswal we always provide an IPO Note that tells you if a price is Fair or Expensive.
2. Market Sentiment
Even if the company is perfect, if the entire stock market is falling on the day of the listing the IPO price will likely fall too. You cannot control the market mood.
3. The Hype Factor
Social media often creates a lot of noise about an IPO. Just because everyone is talking about a new tech startup doesn't mean it is a safe investment. Many famous companies have seen their stock prices drop by 50% within a year of their IPO.
How to Check if an IPO is Safe for You
Before you put your hard-earned money into an IPO follow this simple Motilal Oswal Checklist:
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Read the Object of the Issue: Is the company using your money to grow or just to pay back old loans? Growing is better.
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Look at the Profits: Has the company been making a profit for at least the last three years? Avoid companies that are losing money unless you have a very high risk appetite.
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Check the Grey Market Premium (GMP): While not official, the GMP gives you an idea of what other people think the listing price will be. But be careful—GMP can change quickly.
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Consult the Experts: Use the Motilal Oswal Research reports. Our analysts spend hours reading the hundreds of pages in an IPO prospectus so you don't have to.
Steps to Apply for an IPO in 2026
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Open a Demat Account: You cannot apply for an IPO without one. You can open your Motilal Oswal Demat Account for free in 5 minutes.
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Go to the IPO Section: In our app you will see a list of Open Upcoming and Closed IPOs.
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Enter Your UPI ID: Most retail investors use UPI for payment. It is fast and secure.
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Place Your Bid: Usually you should bid at the Cut-off Price to increase your chances of getting the shares.
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Approve the Request: You will get a notification on your UPI app (like BHIM or Google Pay). Approve it to block the amount.
Summary Table: IPOs vs. Regular Stocks
Open Demat Account and Begin Your Investment Journey!
Open Demat Account and Begin Your Investment Journey!