Gray Market Premium:- An IPO Gray market is a market where shares of a company are bid and share prices are quoted informally by traders. This happens before a company issues shares in an IPO.

Since Gray Market is an unofficial market, there are no rules and regulations in it. Regulators like SEBI are not involved in this. Apart from this, SEBI also does not support it.

Current IPO GMP Today

Check the latest IPO analysis and the estimated grey market rates of the Upcoming IPO given below.

The IPO gray market is an unofficial market where IPO applications or shares are bought and sold before official trading in the stock market.

What is IPO GMP (What is grey market premium in IPO? )

Before being listed in the stock market through IPO, the shares of that company are traded in the gray market. It is on the basis of this trading that the IPO gray market premium is arrived at.

GMP is the price that a buyer has to pay over the issue price of a share. If one share of an IPO comes with an issue price of ₹ 100. If the GMP of this share is running at ₹10 then the buyer will have to pay ₹110 to buy it in the gray market.

The gray market premium is always for one share only. These GMPs give investors an idea of whether the listing of shares will be good or not.

The gray market is illegal and unofficial in India, SEBI never suggests you invest in an IPO on the basis of the gray market. Gray market IPOs are partnerships between investors and stockbrokers. It depends on trust between both parties.

Gray market price is not accurate, IPOs are listed above and below the GMP price. gmp price is 90% accurate for IPO.

The gray market price never affects the original price of the IPO. Whenever the gmp rate is high then the listing price of the IPO is likely to be high.

What is Kostak’s Rate?

Kostak rate is another term like IPO gray market premium. When an investor applies to an IPO but does not want to take shares in the IPO, that is, He does not want to take the risk by subscribing to the shares. In this situation, he can sell his IPO application in the gray market at a cost rate.

If Ram applies for one lot in ABC IPO for ₹15,000. At that time the cost rate of this IPO was Rs 500 per lot. Ram wants to sell his IPO application before allotment. He sells his application to Shyam through the dealer for ₹500.

Right now, whether Ram is allotted shares in the IPO or not, Ram will get ₹ 500. Whereas in the Gray Market Premium deal, if the shares are not allotted, the deal gets canceled. Ram will have to transfer or sell the shares whenever Shyam says.

Here investors like Shyam book applications from many such persons. If he has booked 20 applications and gets five applications, he will recover his cost provided the share is listed at a good price.

The ₹ 500 earned by Ram in this entire process is called the cost rate. Cost rates are per lot. Costco rates vary for each IPO. In Kostak deals, the seller gets a fixed Kostak amount. The same buyer has the right to the profit and loss on the shares.

What is Subject to Sauda?

Subject to deal is also a form of bracket rate. You have placed an IPO application in subject to deal and you sell it to someone for ₹ 1500 per lot in subject to deal. If you are allotted an IPO then that person will give you ₹1500.

In this type of deal, the deal becomes valid only after the allotment of shares in the IPO. This means that only if you are allotted shares in the IPO, the buyer will pay you the amount subject to the deal. If there is no allotment the deal gets cancelled. Whereas whether there is allotment in the cost rate or not, the cost rate is paid by the buyer.

IPO GMP Today FAQs