What is IPO GMP?
IPO GMP or Grey Market Premium is the extra amount that investors are willing to pay for an IPO share in the unofficial (grey) market before it is listed on the stock exchanges. The grey market is an over-the-counter market where deals are made in cash on a personal basis.
The GMP indicates how the IPO might perform on listing day. A high GMP usually signals a strong listing, while a negative GMP suggests a discount listing. Always check the Upcoming IPO Calendar to cross-reference dates with GMP trends.
How is GMP Calculated?
GMP is driven by demand and supply. If the demand for an IPO is high among HNI (High Net-worth Individuals) and Retail investors, the GMP shoots up. Factors affecting GMP include:
- Company Fundamentals & Financials
- Subscription Numbers (Over-subscription leads to higher GMP)
- Market Sentiment (Bull vs Bear market)
- Peer Comparison
Terminologies related to GMP
Kostak Rate
Kostak rate is the amount an investor gets for selling their IPO application in the grey market, regardless of allotment. This applies even if you don't get the allotment.
Subject to Sauda (SS)
Subject to Sauda allows an investor to sell their potential allotment at a fixed price. However, this deal is valid only if they actually get the allotment. If you get allotment, you pass on the profit; if you check your IPO Allotment Status and find zero shares, the deal is void.
Disclaimer
OpenIPO does not promote or deal in the Grey Market. The IPO GMP figures shown here are for educational and informational purposes only. Grey market trading is unregulated and risky. Investors should make decisions based on the RHP and company fundamentals, not just GMP.