Stop investing money indiscriminately, expert told that this is the safest formula for bumper earnings from IPO, 90% of retail investors get defeated here.

By Samira Vishwas On Jun 8, 2026

Whenever a new IPO (Initial Public Offering) hits the Indian stock market, there is a blind race among retail investors to buy it. Everyone thinks that their money will double on the very first day of listing. In recent years, many great companies have filled the pockets of investors, but do you know that there is a bitter truth of the IPO market which deflates the claims of big companies? At present, investors are eagerly waiting for the entry of global giants like Anthropic, OpenAI and Elon Musk’s SpaceX in the Indian markets to take advantage of the AI boom. But jumping into any IPO without thinking can make you bankrupt. Market giants have now shared a surefire formula by which you can avoid losses in IPO forever.

Shocking revelation: Why do more than 90% of IPOs collapse after listing?

famous financial book "The Lifecycle Trade" An extremely thorough and historical research conducted by Eve Boboch, Cathy Donnelly, Eric Krull and Kurt Dall for has revealed a figure that is enough to blow the mind of any investor. According to this research, more than 90% of the IPOs coming in the stock market ultimately go down by breaking the lowest level (first-day low) on the first day of their listing. This means that no matter how strong a company is, its stock is almost certain to suffer a major decline after the initial frenzy of listing. Sometimes it takes many years for these stocks to recover from their losses and return to their old levels. In such a situation, the question arises that what is the right way for a common investor to make safe money in IPO?

What is the magic formula of ‘The IPO Base’?

Big tax and market strategists believe that instead of blindly investing money immediately in any newly listed company, one should be patient for a few days or weeks. Investors should wait until a strong ‘IPO base’ is formed on the technical charts. In very simple words, ‘IPO Base’ is a ‘rest stop’ of the stock market, which is formed on the chart within the first 25 days of the listing of a share. During this time, the initial ups and downs, nervousness and huge fluctuations within the share calm down completely and the share starts sustaining in a very narrow range.

Understand how a perfect ‘IPO base’ works with these 3 steps

You can easily understand when a wise investor should enter a new stock by following this three-step cycle of ‘IPO Basis’:

1. Initial Peak: The highest level or high that the share touches in the initial excitement after listing is considered to be the beginning of the IPO base.
2. Pullback: After touching the initial peak, there is profit booking in the stock and it falls slightly. Usually this decline is up to 20% from the upper level, but if the market mood is very bad then it can be up to 48% to 50%. At the time of this decline, big institutional investors (like Mutual Funds and foreign FIIs) secretly start buying and accumulating that share, due to which the share gets a strong support (price floor) from falling down.
3. Buy Point: When the stock recovers from the bottom and moves upwards and crosses its earlier ‘initial peak’, then in technical language it is called ‘buy point’ or ‘breakout’. This is the best and safest time to buy.

Where do retail investors make the biggest mistakes?

Market experts say that most of the retail investors misunderstand the traditional rule of stock market ‘Buy Low, Sell High’ (Buy Low, Sell High). They make the big mistake of catching the continuously falling stock after the IPO listing right when it is about to fall, which is a very suicidal move like catching a falling axe. On the contrary, this unique strategy of ‘IPO base’ gives full opportunity to the stock to prove itself in the market first. The stocks which pass this tough test and come out of their base, prove to be multibaggers and real horses of long race in future. So the next time you think of betting in an IPO or a newly listed company, remember this formula and keep your hard-earned money safe.