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Why is the cut-off price higher for retail OFS orders?

The orders for an Offer For Sale (OFS) issue are collected over a two-day period. 

The first day is reserved for Institutional and HNI orders (bids above Rs. 2 lacs). All retail bids are placed on the second day of the issue. Based on the bids received on the first day of the issue, a cut-off price is determined for the second day. The new cut-off price becomes the floor price for retail bids. 

The cut-off price for retail bids can be the same as the institutional bids in case of lower demand for the OFS. On the other hand, a strong institutional demand can result in a significantly higher cut-off price for retail. Learn more.

Note: Individual and HUF bids (worth less than Rs. 2 lacs) are considered retail bids.