Know what is Auction? How to bid for auction shares in Nepal? It may be opportunities to grab a share at lower price than market prices which directly leads to profitability.
Auction is simply a type of sale. It is the process of buying & selling goods & services, fixed asset, old assets, securities (share) though public bidding. People should take part in competitive bidding for buying assets or securities in auction market. Those people who bid the highest price will get securities or goods.
How share brings into auction
As we know many company have been floating right share to hike their paid up capital. Due to many reasons behind all right shares are not fully subscribed by shareholders. These unsold right shares are brings into auction for public.
If anybody have taken share loan with collateral of securities (share) unable to pay loan than banks will sell such shares from auction to cover loan amount. Some time matured mutual fund also brings shares in auction in order convert into cash or liquid for refunding to fund holders.
For auction share one can quote price at least Rs. 100 & above with minimum 100 unit of share.
Things to remember
While bidding auction share, one must compare with market price of particular stock. It is found that many bidders had bid the price more than market price. Such crazy decision of bidding more than market price leads to losses. You can get as much as you want to buy at market price which can be sell after 3 days. Why should bid for auction more than market price. Auction share will take time to listed in NEPSE & to be listed in DEMAT account. So, auction should be bided lower than market price to gain profit.
At least bid action share upto 80% to 90% of last trading price. If you bid more than 90%, there is more chance of bearing losses.
Process to bid for auction share
- Visit office of issue manager & other designated organization and get form. It cost Rs. 100. Fill up the form carefully; number of share, price per share, share qty & price in number & word, BOID Number; etc.
- Visit branches of bank as per offer letter & deposit the amount in the name of issue manager.
- Put deposit slip, citizenship’s copy along, filled form inside envelope & sealed it properly.
- Lastly submit an envelope at office of issue manager.
The bid will be opened the next day or 3-4 days of offer closed.
After the second or third of bid opening, money will be refunded to non allottee of auction share.