| Current IPOs | IPO GMP | Price | Gain | Date | Gain Est | Type |
|---|---|---|---|---|---|---|
| Ajax Engineering | ₹12 | ₹629 | 2% | 10-12 Feb | ₹- | Mainboard |
| Hexaware Technologies | ₹2 | ₹708 | -% | 12-14 Feb | ₹- | Mainboard |
| Quality Power | ₹20 | ₹425 | 5% | 14-18 Feb | ₹- | Mainboard |
| Eleganz Interiors | ₹5 | ₹130 | 4% | 7-11 Feb | ₹5,000 | NSE SME |
| Chandan Healthcare | ₹5 | ₹159 | 3% | 10-12 Feb | ₹3,000 | NSE SME |
| PS Raj Steels | ₹10 | ₹140 | 7% | 12-14 Feb | ₹7,000 | NSE SME |
| Voler Car | ₹7 | ₹90 | 8% | 12-14 Feb | ₹10,000 | NSE SME |
| MaxVolt Energy | ₹6 | ₹180 | 3% | 12-14 Feb | ₹- | NSE SME |
| L.K. Mehta Polymers | ₹15 | ₹71 | 21% | 13-17 Feb | ₹25,000 | BSE SME |
| Shanmuga Hospital | ₹8 | ₹54 | 15% | 13-17 Feb | ₹15,000 | BSE SME |
| Tejas Cargo | ₹- | ₹168 | -% | 14-18 Feb | ₹- | NSE SME |
| Royalarc Electrodes | ₹- | ₹120 | -% | 14-18 Feb | ₹- | NSE SME |
| Beezaasan Explotech | ₹- | ₹175 | -% | 21-25 Feb | ₹- | BSE SME |
A positive IPO Grey Market Premium (GMP) indicates strong demand for that IPO in the grey market, suggesting optimism among investors. Conversely, a negative GMP reflects little or no demand, which could signal lower investor interest. The level of demand in the grey market often influences whether an IPO listing will be positive or negative. However, it’s essential to remember that GMP trends are speculative and not a guaranteed indicator of listing performance. Always make informed decisions based on comprehensive analysis.
A positive IPO Grey Market Premium (GMP) indicates strong demand for that IPO in the grey market, suggesting optimism among investors. Conversely, a negative GMP reflects little or no demand, which could signal lower investor interest. The level of demand in the grey market often influences whether an IPO listing will be positive or negative. However, it’s essential to remember that GMP trends are speculative and not a guaranteed indicator of listing performance. Always make informed decisions based on comprehensive analysis.
IPO GMP or IPO Grey Market Premium refers to the gap between the price at which the IPO is issued and the trading price of that IPO in the grey market. Even before an IPO is officially listed on the stock exchanges, there is a time period where the IPO shares are traded in the grey market in an informal way. Grey market is essentially an over-the-counter market through which shares are bought and sold without the assistance of the stock exchanges.
IPO GMP is the gap between the price at which the shares of an Initial Public Offering (IPO) are traded in the grey market and the issue price declared by the company. It is an unofficial market where shares can be bought and sold before they are listed on a stock exchange. GMP for an IPO serves as a barometer of investor sentiment toward the IPO. High GMP indicates good demand, hence an investor is confident about the company and expects a rise in its stock price when it lists.
Low GMP signifies weak demand and, hence, less confidence in the future performance of the stock.
It can be noted that GMP may not be an effective predictor for IPO performance after being listed in the stock exchange. There could be several reasons such as the institutional investor demand and the market scenario that would be affecting the listing price in real terms. GMP is only a reflection of the prevailing market sentiment at a particular time, and the performance of shares after listing depends on many factors, including the fundamentals of the company, market conditions, and general economic factors.
The IPO GMP gives an indication of market sentiment toward an IPO. A positive GMP means that the shares are trading at a premium above the issue price, meaning there is strong demand. A negative GMP means that shares are trading below the issue price, which reflects weak demand.
Suppose the grey market rate for an IPO is ₹100 and the IPO issue price is ₹200. Then, the estimated listing price would be ₹300 (₹200 + ₹100).
This calculation gives a potential 50% listing gain over the IPO issue price.
This said, the actual listing price might not be exactly that estimated in grey market. All that depends upon the broader trend in the markets through bull and bear runs.
Demand for those shares also goes up because these shares are directly issued by that particular company. Even though it’s a superb tool in this form of assessment, the prediction made is quite accurate not always. Determine the factors involved in determination of the IPO GMPs.
Company Fundamentals: Enhanced financials, growth prospect, and a sound management team will be positive for the GMP.
Market Conditions: The general market sentiment, industry-wise performance, and the economic condition can result in variability in investor’s sentiments that will be transmitted to the GMP accordingly.
Demand and Supply: The number of available share issues to float as an IPO and the total demand for those shares by the investors will determine the GMP.
Kostak Rate is the price at which one investor sells his IPO application to another investor before the IPO is listed or allotted officially. It allows the seller to buy a profit even before he procures the IPO shares. The cost of buying and selling of IPO applications in the grey market gets gauged through the Kostak rate. For instance, if a seller sells an IPO application for ₹1000 application, it gets a profit of ₹5000 while selling five allotments or otherwise.
It is a Sauda in which both parties agree for an IPO application to a predetermined price and depend upon the allotment, meaning the buyer agrees on the particular amount if and only if allotment comes; else the deal (sauda) gets null and void. The trading through Grey Market has all risks related to safety:
Trading in the grey market is unofficial and lacks regulatory oversight, hence, risky. The investor should, therefore, be very careful to trade in the grey market since prices may change significantly. The information gathered from the grey market should only be for knowledge purposes and not for trading purposes. Instead, the investor should trade in the official IPO market after listing.
The IPO GMP gives an idea of the market sentiment and estimated listing gains, but it is not a sure shot predictor of performance. The actual listing price of the IPO will depend on various factors such as demand from institutional investors, market conditions, and the company’s fundamentals. Always make investment decisions based on comprehensive research and due diligence rather than relying solely on the grey market.
