The grey market can be very helpful in potential listing prices and gauging interest levels, however, in the end, it is just an informal mechanism. The grey market has a tendency to work smoothly when the market is in a stable state but as soon as the market starts to become volatile, it becomes very volatile. Therefore, if you want to buy unlisted shares in India, don’t start with the grey market, particularly when the market is not in its optimal state. Investment in the grey market is also not recommended because it is prone to manipulation, which can hamper even your well-planned investment.
Don’t follow the masses
If all your friends or colleagues are investing in a particular company does not mean that you should also buy pre IPO shares of that company. As per all the standard estimates, all the IPOs are oversubscribed in the bull market but only a few of them give good returns. For example, during last year, around five insurance IPOs were launched in the market, however, only one of them turned out to be profitable. Due to this, it is of utmost importance that you buy unlisted shares in India from only those sectors where you have an expertise in. If you do not have an expertise in any particular industry and still you want to buy pre IPO shares then you should do it with the help of a professional analyst or an investment agency.
Don’t blindly follow the trends
Many time investors buy unlisted shares under the influence of an ongoing trend in the market. While making such investments, the investors are generally unaware that they are making their investment solely on the basis of the hype that has been created in the market. Any form of investment made under the influence of such hypes is likely to turn out bad. Therefore, while making an investment, constantly be on lookout whether the current market mood regarding some stocks is truly a trend or just some hype.
Do not make your decision on the basis of subscription data
The points discussed above will surely help you in greatly reducing the noise from the true market information. However, in spite of great care, people become prone to making bad investment decisions due to the influence of the subscription data. Certainly, the subscription data can be very helpful in many cases, however, one should not take all the information in it at a face value because they are prone to manipulation. Furthermore, the subscription information is usually a representation of the herd mentality of the market, a factor that we have already warned against.