What is Live IPO GMP, Why it is Important for Investors and How it Works
By Rajan Chaurasiya January, 20 2025 17:57 PMWhat is Live IPO GMP, Why it is Important for Investors and How it Works
IPO (Initial Public Offering) is an important topic of discussion among investors in the market. IPO Grey Market Premium (GMP) reflects the demand for the shares of a company in the unofficial market before it is listed. This article will tell you detailed information about Live IPO GMP, current GMP status, its importance and the risks associated with it.
IPO
IPO (Initial Public Offering) is the process in which any company issues its shares for the first time to raise funds from the public and converts a private company into a public company. Currently it has become the most popular means of raising capital for any company. Through this, the company raises money to invest in its business.
How does IPO GMP work?
Grey Market Premium, also known as Live IPO GMP, is the process through which the difference between the trading price of IPO shares in the grey market and the IPO issue price is estimated. For example, let’s assume the IPO issue price is Rs 800 and another investor is willing to pay Rs 300 extra to buy the IPO shares.
This means that the GMP of the IPO is Rs 300 per share. Live IPO GMP helps in estimating the listing price of the IPO in advance. In the above example, the investor has estimated a listing price of Rs 1,100 (IPO issue price plus GMP i.e. Rs 800 + Rs 300). Although there is no guarantee whether the estimate is correct or that the IPO listing price will exactly match the GMP, GMP is one of the most important indicators in buying and selling any IPO that helps investors estimate the IPO price and make investment decisions accordingly.
Live IPO GMP Grey Market Dealers Grey market traders are unauthorized individuals who buy/sell IPO shares on an unofficial market (over-the-counter market). In some cases, grey market dealers are also required to underwrite a certain percentage of the IPO. Since the IPO grey market is an unregulated and informal market, you may not find registered traders. You will have to contact local dealers to see if they operate in the grey market and can help you find a buyer/seller for your transaction.
Trading Live IPO GMP Grey Market
The new IPO starts from the issue price and until the IPO shares are listed on the exchange, the live IPO gmp grey market trading function begins and continues until the IPO is launched.
● Informal and unregulated market.
● Trading in the grey market is usually done through telephone and online.
● Trade settlement is done in cash only, usually using the services of an agent.
● Transactions in the grey market are based on mutual trust.
● A round the clock market that works 24*7.
● No regulatory body governs IPO grey market trading.
● No official or registered dealer is involved.
● No formal contracts are issued for transactions made in the grey market.
To trade in the grey market, as the very first step, an investor needs to find a grey market dealer. Since dealing in the grey market is completely based on trust, the dealer creates clients through references. Thus, an investor can start trading in the grey market when he is referred to the dealer through a good and reliable contact.
Live IPO GMP Grey Market Rate Type
● If the GMP value is positive or very high, it indicates that the IPO may have good returns on listing or even a bumper listing. Example: If the IPO issue price is Rs 200 and GMP is Rs 200, then the listing is expected to be at Rs 400 (100% profit).
● If the premium is low or negative, investors may be unsure whether the stock will be successful after listing and may expect the listing to be at a discount. Example: If the IPO issue price is Rs 500 and GMP is Rs 200, then the listing is expected to be at Rs 300.
live IPO gmp The grey market is an attractive option for adventurous investors, offering an exciting journey through the lesser-known parts of Wall Street. It is a maze of opportunities and risks, where fortunes can change in an instant. Approach it with caution and skepticism, and the grey market can be a valuable tool. Despite being wrapped in secrecy, its whispers can provide insight into market sentiment and potential IPO performance. Remember, knowledge is power, and in the grey market, knowledge is gained from every conversation and rumour.
Kostak Rate
Live IPO GMP Kostak Price is an agreed price at which IPO applications are sold and bought, irrespective of their allotment status. Coastack Price is the fixed price paid by the buyer of an IPO application to the seller of an IPO application.
For example, let’s assume an investor has applied for 15 shares at Rs 100 per share, which is priced at Rs 1500. Now there is another investor who is willing to buy this upcoming IPO and agrees to pay Rs 200 as a premium to buy the entire IPO application.
In this case, the seller of the IPO application gets a fixed profit of Rs 100, irrespective of whether he gets an allotment or not.
Subject to Deal
The subject-to-deal price is an extension of the IPO Coastack Rate. In subject-to-deal, the buyer of the application agrees to pay a certain price against the IPO application only if the seller of the IPO application receives an allotment in the IPO. Subject-to-deal rates are generally higher than Kostak rates.
Conclusion
Live IPO GMP Through the Grey Market Premium (GMP), investors get to know in advance whether they should invest in the company or not. This makes the process important for investors, giving an indication of the public attracted to the IPO in the market and the potential listing gains. However, it is not always advisable to invest in any company based only on GMP. Along with GMP, investors should give priority to the fundamental position, financial figures and long-term outlook of the company along with complete information about the IPO and the company. And invest under the right idea and strategy.
Also, stay tuned here for Live IPO GMP or any other information.