Many of these shares have surged 25-40% in the last six months in the unofficial market, according to brokers who arrange such deals. For instance, L&T Infotech, which was trading at Rs 700-750 about three months ago has risen to Rs 825-900 after it secured regulatory approval for an initial public offering (IPO). Similarly, RBL (formerly Ratnakar Bank), which is also looking to list, is trading at Rs 220 against Rs 175-200 six months ago.
Brokers said there is strong demand for companies that are planning IPOs. "These are well-established companies with sound promoters. Activity picks up as the IPO comes closer, as investors are assured of easy liquidity after that," said Sandeep Ginodia, director, Altius Investech, a firm that spots such opportunities.
Typically, investors hold such shares for a year after the IPO— as pre-issue capital is locked in for one year from the date of the public issue — and then sell them in the secondary market, benefiting from the tax-free status of the capital gains as well.
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