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By IPOCheckr Editorial TeamLast reviewed
On listing day an IPO's shares do not open at the issue price or at the grey market price. The exchanges run a special one-hour pre-open call auction from 9:00 to 10:00 am, collect buy and sell orders, and set the opening price at the level that matches the most shares. Normal trading starts at 10:00 am, within a price band set around that discovered price. Under SEBI's T+3 timeline, listing happens on the third working day after the issue closes.
T+3: the third working day after the issue closes (T).
Order entry, modification and cancellation, with a random close in the last ten minutes.
Orders matched and the equilibrium (opening) price fixed.
Normal trading begins. Unmatched limit orders carry over.
SEBI cut the time between issue closure and listing from six working days to three. The T+3 timeline has been mandatory for issues opening on or after 1 December 2023. ‘T’ is the issue closing date, and only working days count, so weekends and exchange holidays push dates out.
An issue that closes on a Wednesday would normally see allotment finalised Thursday evening, refunds and demat credit on Friday, and listing on Monday. If Friday is an exchange holiday, everything shifts by a working day. IPOCheckr's individual IPO pages show the tentative dates published in each RHP.
For IPO and re-listed scrips, the exchanges run a special pre-open session first introduced by SEBI in 2012. As currently described by SEBI, it lasts from 9:00 am to 10:00 am: 45 minutes for order entry, modification and cancellation; 10 minutes for order matching and trade confirmation; and a 5-minute buffer before normal trading.
Order entry closes at a random moment between the 35th and 45th minute. The random close stops anyone from placing a last-second order designed to move the price.
Only limit orders are accepted. There is no conventional price band in the session, but exchanges apply an operating range (often called a dummy price band) to catch fat-finger orders. For mainboard IPOs this starts at 50% below to 100% above the issue price and can be widened in steps of 10% when orders bunch at the edges. For SME IPOs the range is narrower and is not widened, which effectively caps how far above the issue price an SME stock can open.
At the close of order entry, the exchange looks at every price level and works out how many shares would trade there. The equilibrium price is the one at which the maximum quantity can be matched. That becomes the opening price, and all matched orders execute at that one price, whatever limit each buyer or seller entered.
A simplified example for an issue priced at ₹300:
After 10:00 am, the stock trades in the normal market with a price band around the discovered opening price. Under SEBI's framework, mainboard issues up to ₹250 crore have historically had a 5% band on listing day and larger issues a 20% band. The band that applies to a particular stock is stated in the exchange's listing-day notice, so check that rather than relying on a rule of thumb.
When a stock hits the top of its band, people often say it has hit the ‘upper circuit’: trading continues, but no trade can happen above that price for the day. Smaller issues may also be placed in a trade-for-trade segment for an initial period, which means every trade must be settled by delivery.
Orders entered in the pre-open session that did not match are carried into the normal session at their limit price, so check your order book at 10:00 am.
Your allotted shares appear in your demat holdings on T+2, usually by the evening. On listing day you can place a sell order in the pre-open session or wait for normal trading.
Primary rules and official pages this guide was checked against. Rules change, so the official text always prevails.
General information, not investment advice. Rules set by SEBI, RBI and the exchanges can change, so confirm current limits with your broker or the offer document.