IPO GMP Rate Today 2023, Latest IPO Watch GMP 28 December

IPO GMP Rate Today – The grey market premium, also known as the IPO GMP, is information computed based on the demand for an IPO by a firm. After the IPO date and price band announcements, the grey market begins unofficially in the unregulated market. Before participating in an IPO, IPO investors always look at the Upcoming IPO GMP, but this might change according to market conditions, demand, and subscription numbers.

Latest IPO GMP Today

Check out the most recent IPO study and estimated IPO gray market rates for the upcoming IPO with listing gain, which are listed below:

What is IPO GMP?

• The IPO GMP (IPO Grey Market Premium) is the difference between the IPO’s issue price and its grey market trading price. Before an IPO is formally listed on the stock exchanges for public trading, there is a period in which the IPO shares are traded in the grey market. The grey market is an over-the-counter market in which shares are bought and sold without the involvement of stock exchanges.
• The difference between the price at which shares of an Initial Public Offering (IPO) are traded in the grey market and the issue price set by the company is known as the IPO grey market premium (IPO GMP). The grey market is an unauthorized market where shares can be purchased and traded before their listing on a stock exchange. GMP can be used to evaluate investor interest in an IPO. A high GMP indicates that investors are bullish on the firm and anticipate an increase in share price when it is listed on the stock exchange. A low GMP suggests that investors are negative about the company and anticipate a drop in share price when it goes public.
• It should be noted that the GMP is not necessarily a reliable indicator of how the share price will perform when the IPO goes public on the stock exchange. Some factors, such as the level of demand from institutional investors and overall market circumstances, can influence the share price of the listing. The GMP is just a representation of investor sentiment at a given period. The actual performance of the shares will be determined by a variety of factors, including the success of the firm, general market circumstances, and other considerations. The IPO Grey Market Premium (GMP) is one crucial feature that piques the interest of potential investors. This article aims to provide a comprehensive understanding of IPO GMP, IPOs, and their significance in the IPO grey market.
• The IPO GMP indicates the market attitude towards the IPO. If the GMP is positive, it indicates that the shares are being traded at a greater price than the issue price, showing that the IPO is in high demand. A negative GMP, on the other hand, indicates that the shares are being traded below the issue price, indicating poor demand.
• Let’s look at how to compute the projected listing price after factoring in a premium. If the grey market IPO rate is 100 and the IPO price is approximately 200, then the expected listing price is around 300. According to the computation, the listing gain will be 50% of the IPO price.
• Due to the bull/bear market or demand for the company’s shares, the listing price of an IPO may differ from the expected listing price provided by the grey market. We have seen that certain IPOs had lower grey markets but listed with bigger gains, whilst a few IPOs in 2021 had higher grey markets but listed with lower profits. Although the grey market usually a key role in calculating IPO listing gains, we strongly advise investors to utilize the grey market rates for information only and not to trade based on the statistics.

Important Points to Consider about IPO GMP:

The grey market transactions are unofficial, with IPO investors and stockbrokers participating. It is dependent on both parties’ confidence.

• Before applying for an IPO, read our IPO analysis.
• Grey market pricing is established and offered by market research or professionals.
• Trading in the Grey Market is not recommended because it is prohibited.
• The Kostak Rate is the premium paid for selling one’s IPO application (in an off-market transaction) to someone else before the issue is allotted or listed.
• Do not subscribe to the IPO at the above-mentioned premium. It is subject to change at any time before listing.
• Subscribe exclusively based on the company’s fundamentals.

What is Grey Market Premium?

• The IPO Grey Market Premium (IPO GMP) is the premium or additional price at which IPO shares are traded before they are formally listed on a stock exchange. It reflects the market’s estimate of the shares’ potential value and demand.
• The “grey market premium,” also known as the “IPO GMP,” is a term used in the IPO market to determine the projected price at which an IPO would be listed. Although it is unofficial, investors use the gray market price of an IPO to calculate the stock’s fixed gain. It is operational before the IPO listing and during the days between the IPO commencement date and the allotment date. The gray market premium predicts how the IPO will perform on the day it goes public with an expected price.
• Let us now examine how the IPO GMP calculation progresses. If the firm issues an IPO of 100 and the grey market premium is around 20, we should expect the IPO to list at around 120 on its listing day. However, there is no dependability. IPO GMP works in the majority of cases, but not in all. We’ve seen that if an IPO is in high demand and the expected HNI and QIB subscription is high, the IPO will list around the stated price with an estimated IPO GMP.

What Factors are Influencing IPO GMP?

Several factors contribute to the IPO Grey Market Premium, including:

• Company Fundamentals: Strong financials, growth prospects, and a reputable management team can positively impact the GMP.
• Market Conditions: Overall market sentiment, sector performance, and economic factors influence investor appetite for IPOs.
• Demand and Supply Dynamics: The number of shares available and the level of investor interest play a crucial role in determining the GMP.

What is Kostak’s Rate?

• The Kostak rate is the amount paid by a single investor to the seller of an IPO application before the listing of the IPO. The Kostak rates behave similarly to the grey market. One can fix their profit by buying and selling their complete IPO application outside of the market on Kostak rates. Regardless of whether the investor receives an IPO allotment, the buyer must pay the Kostak IPO charges.
• If a person submitted 5 applications for one IPO and sold them for 1000 rupees each, he or she has secured the IPO profit of 5000 rupees. Even if he gets the allotment in two applications, his profit will be $5,000. Now, if he sells the stock and makes a profit of roughly $100,000, he or she must distribute the remaining profit of $5,000 to the investor who purchased the application. This is the most secure method of selling your application on the IPO gray market.

What is Subject to Sauda?

• The Subject to Sauda on the application, according to the Kostak rate, is the amount decided when the investors receive the firm allotment on their IPO Application. If one buys or sells the IPO application on the subject to sauda, it signifies that if the allocation is received, the sauda will be canceled. Profit in this case cannot be predicted because it is determined by the allocation. Again, if one receives an allocation and sells the application for around $100,000, and the profit on listing day is around $15,000, one should give $5,000 to the person who purchased the application.

How to Calculate Grey Market Premium?

• The IPO GMP, also known as the grey market premium, is a price that is transacted on the black market before the IPO listing process. The computation is based on the company’s performance, demand in the gray market, and subscription possibility. Assume that the X IPO price is fixed at 200 and the grey market rate is 100, which means the IPO might list at 300 (ie: 200+100). This is still an assumption, and the real listing price may differ from the gray market pricing.

Are Grey Market Stocks Safe?

• It is dependent on the broker or trader, and we believe it is risky. Trading in the grey market is entirely at your own risk. There may be higher-than-usual fluctuations, so proceed with caution. As we suggested, for listing gain purposes, simply refer to the IPO GMP. Be prudent and only trade in the primary market after listing.

How Do I Buy / Sell IPO Application in Grey Market?

• The gray market is not affiliated with any official people or enterprises. Based on the IPO GMP, certain brokers buy and sell IPO applications on Kostak Rates or Subject to Sauda Rates. Local brokers who act as middlemen between buyers and sellers and conduct gray market trading of IPO applications should be sought. Be aware of the rates before purchasing or selling.

Significance of IPO GMP

• The IPO Grey Market Premium is a measure of market sentiment as well as the perceived value of the IPO shares. It enables prospective investors to judge the level of demand and the premium they may have to pay if they want to buy shares during the IPO. It is important to note, however, that the GMP does not promise future performance and is susceptible to change.

IPO Grey Market Premium aka IPO GMP FAQs:

Q. What is Grey Market Premium aka IPO GMP?

Ans. The IPO Grey Market Premium (IPO GMP) refers to the premium or additional price at which IPO shares are traded unofficially before their official listing on a stock exchange. It represents the market’s perception of the potential value and demand for the shares in the market.

Q. What is Kostak Rate?

Ans. The Kostak rates apply whether the investor gets the IPO allotment or not, the buyer should pay the Kostak rates for the IPO.

Q. What is Subject to Sauda?

Ans. The Subject to sauda applies whether the investor gets the IPO allotment, the buyer should pay the rates decided on the deal for the IPO.

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