The grey market premium, also known as the IPO GMP, is information calculated based on the demand of a company planning an IPO. Grey market premium rates are generally determined in India's secondary (unregulated) market. Following the announcements of the IPO date and price band, the grey market begins unofficially in the unregulated market. Every day, the IPO Grey market premium/IPO GMP and Kostak rate may change. Before investing in an IPO, investors always check at the IPO GMP, which might fluctuate depending on market conditions, demand, and subscription numbers. If IPO demand is higher, then the IPO listing price may be opened at a higher price.
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Current IPO GMP Grey Market Premium Today
Check out the latest IPO analysis and the estimated IPO grey market rates for the upcoming IPO with the estimated listing gain.
| Equity / IPO Name | IPO GMP ₹ |
IPO Price ₹ |
Expected Gain | Kostak Rates ₹ |
Subject to Sauda ₹ |
|---|---|---|---|---|---|
| ESAF Small Finance Bank 03-07 Nov |
- | 60 | -% | - | - |
| Honasa Consumer 31 Oct-02 Nov |
10 | 324 | 3% | - | - |
| Cello World 30 Oct-01 Nov |
130 | 648 | 20% | - | - |
| Blue Jet Healthcare 25-27 Oct |
25 | 346 | 7% | 400 | 2000 |
| Tata Technologies Coming Soon |
240 | - | -% | - | - |
| Equity / IPO Name | IPO GMP ₹ |
IPO Price ₹ |
Expected Gain | Kostak Rates ₹ |
Subject to Sauda ₹ |
|---|---|---|---|---|---|
| Transteel Seating 30 Oct-01 Nov |
20 | 67-70 | 29% | - | - |
| KK Shah Hospitals 27-31 Oct |
0 | 45 | 0.00% | - | - |
| Paragon Fine 26-30 Oct |
95 | 100 | 95% | - | 85000 |
| Shanthala FMCG 27-31 Oct |
– | 91 | -% | - | - |
| Maitreya Medicare 27 Oct-01 Nov |
60 | 82 | 73% | - | 70000 |
| Ondoor Concepts 23-27 Oct |
10 | 208 | 5% | - | - |
| Rajgor Castor Derivatives 17-20 Oct |
8 | 50 | 16% | - | 10000 |
IPO GMP Frequently Asked Questions – FAQs:
What is IPO GMP (Grey Market Premium)?
IPO Grey Market Premium (IPO GMP) is a premium at which shares of an IPO are traded unofficially in the secondary market before their official listing in the stock exchange.
How GMP works in IPO?
In the IPO market, the "grey market premium," also called the "IPO GMP," determines the estimated price at which an IPO might be listed. Investors calculate the stock's fixed gain using the grey market price, even though it is unofficial. It works before the IPO listing as well as during the days between the IPO start date and the allotment date. An IPO's grey market premium provides an estimate of how it might perform once it gets listed.
How to calculate GMP of IPO?
It will be interesting to see how the IPO GMP calculation goes with an example of Nykaa IPO. The IPO Price was fixed at ₹1125 and the grey market premium was around ₹750, then we can assume that the company might list at around (₹1125+₹750 = ₹1875) on its listing day. But the Nykaa IPO was listed at ₹2018 on its listing day.
In general, IPO GMP may not be completely reliable. While it can be accurate in certain situations, it's not exactly foolproof. From what i've seen, IPOs tend to be listed at the expected price, along with an estimated IPO GMP, only when there is a high demand for the IPO and the estimated subscriptions from High Net Worth Individuals (HNIs) and Qualified Institutional Buyers (QIBs) surpass the given price.
What Factors are Influencing IPO GMP?
When it comes to the IPO Grey Market Premium (GMP), there are a few key factors that come into play. Let's take a look:
Company Fundamentals: Strong financials, promising growth prospects, and a solid management team can have a positive impact on the GMP. Investors tend to be more interested in companies that show great potential.
Market Conditions: The overall sentiment of the market, how different sectors are performing, and even economic factors can influence investor appetite for IPOs. If the market is doing well and there is optimism in the air, it often leads to higher GMP.
Dynamic Demand and Supply: The availability of shares and the level of interest from investors play a crucial role in determining the GMP. When there is high demand and limited supply, the GMP tends to rise.
So, these are the factors that contribute to the IPO Grey Market Premium. It's a combination of company strength, market conditions, and the balance between supply and demand.
Is Grey market Premium (GMP) changed every day?
Yes, the Grey market premium changes every day based on the demand for the shares in the stock market.
In simple words, if there's a lot of demand for a stock, the Grey Market Premium goes up. But if interest drops, it goes down. So, the Grey Market Premium basically shows how much excitement and interest surrounds those shares. It's like a reflection of how much people really want them.
What is limit of IPO Grey market premium ( IPO GMP)?
The Grey Market Premium for an IPO has no limit. It depends on how much people want those shares. If there's a lot of interest, they might open with a higher price and make a good profit. But if nobody's interested, they might not do as well and even open with a negative price.
So, it's like a popularity contest for stocks. If everyone likes them, they'll do well. But if nobody cares, it might be a bit of a struggle.
Are Grey Market Stocks Safe?
The safety of trading depends on the broker or the person you are trading with. We advise caution when trading in the grey market, as there is a risk involved, and trading in these markets is entirely at your own risk. Prices can change a lot, so it's important to be careful when trading. We suggest referring to the IPO GMP only for expected listing gains. Before making any trades, it would be best to wait until the stock is listed on the stock market.
How Do I Buy / Sell IPO Application in Grey Market?
In the grey market, there aren't any official individuals or businesses involved. Instead, some brokers buy and sell IPO applications based on the IPO GMP using Kostak Rates or Subject to Sauda Rates. If you want to trade IPO applications on the grey market, you need to look for local brokers who can act as middlemen between buyers and sellers. Just make sure you stay informed about the rates before you decide to buy or sell.
What is Kostak Rate?
The Kostak rate refers to the price that an investor pays to the seller of an IPO application before the IPO is listed. Just like the grey market itself, the Kostak rates can fluctuate. By selling their entire IPO application at the Kostak rate outside of the market, investors can lock in their profit. Whether or not the investor gets an allotment, the buyer is obligated to pay the Kostak rate for the IPO.
What is Subject to Sauda?
The Subject to Sauda rate is determined when investors receive the firm allotment on their IPO application, following the Kostak rate. If someone buys or sells the IPO application based on the Subject to Sauda rate, it means they can receive the agreed amount only if they are allotted the shares; otherwise, the agreement is canceled. This method does not allow one to fix their profit as it depends on the allotment.
Few key points to know about IPO GMP
- The IPO grey market is known for its quick changes and volatile rates. It's important to understand that making investment decisions solely based on these grey market rates can be risky. We recommend referring to our research and analysis section for more reliable information.
- Research indicates that retail investors are often influenced by market sentiment and may overreact, particularly when it comes to IPO investments. It's essential to stay stable and consider all factors before making any investment decisions.
- IPO GMP rates are derived from market sentiments. It's always a good idea to stay informed and consult professional advice to accurately assess the situation.
Disclaimer:
The listing price of an IPO may differ from the expected listing price provided by the grey market due to market conditions (bull/bear) or demand for the company's shares. Even though the grey market has constantly been identified as a key determinant of IPO listing gain, we strongly advise investors to consider the rates as information and not as an investment decision.