Before regular trading starts, exchanges run a pre-open call auction for newly listed shares. Orders collected during this window set the opening price.
After that, the price moves with normal supply and demand. Shares can trade above or below the issue price on the same day.
An easy example
An IPO priced at Rs 372 may open trading at Rs 431. That difference is the listing gain for those who received allotment. It can equally open lower.
Important note
A special pre-open session determines the opening price based on buy and sell orders collected before trading begins.
Common mistake
Assuming the opening price is stable. Prices often move sharply in the first hours of trading.