Latest IPO GMP Today (6 October, Prices in INR)
Main board IPO GMP
| IPO Name | IPO GMP | IPO Price |
| IRM Energy | ₹105 | ₹505 |
| Plaza Wires Limited | ₹15 | ₹54 |
| Updater Services | ₹4 | ₹300 |
| JSW Infrastructure | ₹25 | ₹119 |
| Signatureglobal India | ₹40 | ₹385 |
| Manoj Vaibhav Gems | ₹18 | ₹215 |
| Sai Silks Kalamandir | ₹7 | ₹222 |
| Yatra Online | – | 135-142 |
| Zaggle Prepaid Ocean Services | ₹10 | ₹164 |
| SAMHI Hotels | ₹2 | ₹126 |
The Grey Market, also known as a parallel market, is an unofficial marketplace for stocks and IPO applications. In this market, investors trade shares or applications before they are officially listed and traded on the stock exchange. It operates outside the regulatory oversight of stock exchanges and regulatory authorities like the Securities and Exchange Board of India (SEBI). Here’s an overview of the Grey Market and how it works:
- Unofficial Market: The Grey Market is not a formal or regulated stock exchange. It operates informally and without the backing of official authorities.
- Trading in Cash: Transactions in the Grey Market are typically conducted in cash. It is a cash market where investors deal directly with each other without the involvement of third-party institutions such as stock exchanges.
- No Regulatory Backing: Unlike the official stock market, the Grey Market lacks regulatory oversight and does not have the protection and rules provided by SEBI.
- Kostak and Grey Market Premium: Within the Initial Public Offering (IPO) Grey Market, two commonly used terms are “Kostak” and “Grey Market Premium.” These terms relate to the pricing and demand for IPO shares in the Grey Market.
- Demand and Supply: Grey markets operate on the principles of supply and demand. Traders and investors buy and sell shares before they are officially listed based on their expectations of future demand for these shares.
- Exit Route: The Grey Market can serve as an exit route for individuals who want to sell their IPO shares before they are listed on the stock exchange. It also provides an option for investors who missed the IPO deadline to purchase shares.
- Underwriter Insights: Companies can gauge market sentiment and investor demand by observing the trading of their shares in the Grey Market before their official listing.
Grey Market Stock: Grey Market stocks are shares of a company that are offered and traded unofficially before they are issued in an IPO. These stocks are not part of the official stock market until they are officially listed.
Grey Market Premium: The Grey Market Premium represents the amount at which IPO shares are traded in the Grey Market. It reflects investor sentiment and indicates how the IPO may perform on its listing day. For example, if an IPO’s issue price is Rs. 100, and the Grey Market Premium is Rs. 300, investors are willing to buy shares at Rs. 400 (100 + 300).
Types of Trading in Grey Market:
There are two types of trading in the Grey Market:
- Trading of allocated IPO shares before they are officially listed: This involves individuals who apply for shares in an IPO but are willing to sell them before the official listing. They may sell to friends or through grey market dealers at a premium. Allocation of shares determines the final settlement.
- Trading of IPO applications at a specific rate or premium: Traders buy and sell IPO applications, and the application’s price is determined based on market conditions. Applications can be sold to friends or via grey market dealers. Sellers receive a premium regardless of share allocation during IPO allotment.
Kostak Rate in an IPO:
The Kostak rate represents the premium or price at which IPO applications are traded in the grey market. It signifies the gains applicants make by selling their applications before share allocation. It provides a way to minimize the risk associated with share allotment and listing gains.
How GMP (Grey Market Premium) is Calculated:
GMP is calculated by considering the premium amount at which IPO shares are trading in the grey market. For example, if the IPO price is Rs 900 per share, and the GMP is Rs 300, it suggests that the shares may list at Rs 1200. GMP values fluctuate daily based on market demand.
How IPO Shares Are Traded in the Grey Market:
The process of trading IPO shares in the Grey Market involves investors applying for IPO shares, some of whom become sellers and others become buyers. Buyers acquire shares with the expectation that they will be allocated at a premium. Grey Market dealers facilitate transactions between buyers and sellers. Shares can be sold at a fixed amount to the dealer if sellers do not want to take the risk of stock market listing. Once shares are allocated, sellers decide whether to sell at a certain price or transfer them to the buyer’s Demat account.
It’s important to note that Grey Market trading operates outside the formal regulatory framework, and investors should exercise caution and conduct thorough due diligence when participating in such markets. Trading in the Grey Market carries risks and may not provide the same level of investor protection as official stock exchanges.
Final Thoughts:
While grey market trading offers opportunities for gains, it also carries a high level of risk. It’s essential to conduct thorough research and analysis before engaging in such activities. Grey market premium serves as an indicator of an IPO’s potential performance after listing, but it should not be solely relied upon for investment decisions.