Grey Market Premium

This page we have provided the grey market premium (GMP) and Kostak Rates of upcoming and open IPOs. Issues are listed by IPO name, offer price, grey market premium and Kostak rates. Remember the figures are obtained from the internet and we do not deal in grey market.

What Is IPO Grey Market?
In fact in IPO its almost a parallel economy is running. Surprising that this parallel market is much bigger than the official markets even though its illegal. We know where is NSE and BSE situated. But do we know where is grey market? Its all over India. Its specially active in cities like Ahmedabad, Jaipur, Rajkot, Indore and Mumbai. IPO grey market is unofficial and unregulated buying and selling shares of IPOs before the IPO is actually listed in the exchange. The buyer and seller talks to each other generally over phone and carry out the transaction. The price at which the shares of IPO trades unofficially is called the IPO Grey Market Premium OR GMP.

Grey Market PremiumWhy is GMP so significant?
Once an IPO is listed the prices are driven by simple demand and supply and the transactions are regulated. But in the grey market the buying and selling are done by speculators and these unofficial rates drive the actual IPO listing price significantly.

How The IPO Grey Market Premium Is Calculated?
The GMP is mainly decided on guessings of the buyer and seller. They guesses where the IPO can actually be listed and trades unofficially on the basis of their guess. The actual trade takes place on the issue listing date or just after listing. Say Mr. A has purchased 100 shares of an IPO in grey market from Mr. B at Rs. 200. On listing date the IPO opens and trades at Rs. 400. Mr. A will put buy order of 100 shares in exchange at Rs. 400 and Mr. B will put sell order of 100 shares in exchange at Rs. 400. The GMP of Rs. 200 will then be unofficially transferred by Mr. B to Mr. A in cash. This is how this parallel economy runs and an IPO is traded illegally purely out of speculation.

What Is Kostak Rate?
Kostak is the price someone receives just by selling his or her IPO application in our of the market transaction before listing or allotment of the IPO issue.