15 Days Price Change
Summary
There are various markets for the trading of financial securities and while we are talking about markets, if you are someone who is an investor or are keen on knowing all the market updates, you must have surely come across the term Grey Or Gray Market. In this article we will understand what the grey market is, how does it work, is it legal and a lot more.
Grey market is an unregulated, unofficial shares and application market for financial securities. It runs parallel to other markets such as formal stock exchanges but for companies and shares that are not listed on any stock exchange. When a stock that has been suspended from trading trades off the market or when new securities are bought and sold before the official trading begins, this is known as grey market trading.For a long time, there have been "grey markets" in India, and traders and investors often confirm the legitimacy of these exchanges. Before the shares are listed, traders and retail investors purchase them on the grey markets, which simulate a demand and supply situation. It also provides an exit strategy for anyone who has to withdraw from the IPO for whatever reason. Individuals can still purchase IPO shares even after the closing date
In the grey market, traders make unauthorized offers and bids on the company's shares. A company's equity is referred to as grey market stock, if it is offered to traders after the IPO date and price band announcements. It is typically controlled by a limited group of people, and transactions are dependent on mutual trust and confidence. In India, it is legal and unofficial to trade in shares on the grey market.
Grey market premium (GPM) is a premium amount at which grey market IPO shares are traded. The demand for a firm that is planning an IPO is used to calculate the grey market premium, also known as the IPO GMP. Immediately upon the publication of the IPO date and price band, the grey market begins informally in the unregulated market. Before investing in an IPO, investors always consider the premium, although this might change depending on the market, demand, and quantity of subscriptions.
The GPM depicts potential outcomes for the IPO on the day of listing. Although there is no guarantee, the GMP typically functions as intended and IPOs mostly list around the specified price.
The Kostak Rate is the sum that an investor purchasing an initial public offering pays to the seller prior to the IPO's official launch or listing.The fluctuation of the Grey market premium is caused by bracket rates responding to the market. As a result, Kostak Rates are tied to the IPO Grey Market Premium so that investors might earn greatly from it.
People can sell the entire IPO application to the correct buyer, but since the buyer is unsure of how many shares the company will issue for that IPO, it becomes their responsibility.Another possibility is that the buyer will agree to pay a specific price for the application, and the seller and buyer will settle their discrepancies after the IPO is listed. The sum he pays the vendor is known as the Kostak Rate. The seller who is selling the application still bears the entire tax burden in the event of the Kostak Rates during the Grey market IPO sale.
In the Grey market, the rate with which a buyer buys IPO shares is the Kostak rate, however, there is a “Subject to Sauda” clause as well.In the Subject to Sauda Clause, it will be mentioned that the deal will be valid only if the buyer gets the allotment during the actual listing. The subject to Sauda takes place when the buyer buys IPO shares before its listing in the share market.The Subject to Sauda further asserts that the buyer is not obligated to pay the Kostak Rate for the IPO application that they have purchased from the seller if the buyer is not allotted to the IPO listing.When an IPO share is traded, Sauda has a direct connection to the grey market premium.
It can be concluded that the stock's performance on the grey market predicts how it will do after it is listed. Despite being unofficial, the grey market is not against the law. Many parties and companies issuing an IPO find success with a grey market IPO.
Sell or Purchase Share (Tentative Price)
| Company | Industry | Stock P/E | P/B | Company rating | MCAP (in Cr.) | Current Price |
|---|---|---|---|---|---|---|
| Pharmeasy | e-Commerce | -2.2 | 2.1 | 5463 | 8.5 | |
| Reliance Retail | Retailing | 141.5 | 23 | 698659 | 1400 | |
| Orbis Financial | Finance - Investment | 47.8 | 9.8 | 6756 | 555 |
It is a leading global provider of BPO and IT services. Hexaware Technologies Limited provides IT consulting, software development, and business process services.
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Incorporated in 2019, The company operates a consumer healthcare app called PharmEasy that enables the home delivery of pharmaceutical products.
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Sterlite Power began on 5th May 2015 and is headquartered in Delhi. It is a leading developer & solution provider in integrated power transmission.
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Incorporated in 2015. Signify is into the manufacturing of electric lights and light fixtures for consumers and professionals.
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CSK is a subsidiary brand of India Cements. This company is quite popular in India as it known for its cricket team.
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Elcid Investments Limited was incorporated on 3 December 1981 in Mumbai. It is a Non-Banking Finance Company registered with the Reserve Bank of India.
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STUDDS is a leading manufacturer of motorcycle accessories and helmets. They become the largest helmet manufacturer (two-wheeler) in the world.
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Mohan Meakin manufactures alcoholic beverages such as rum, whisky, beer, etc., and non-alcoholic beverages like apple juice, mineral water, etc.
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Orbis is recognized as a leading player in the Financial Services Industry, providing Securities Services since 2009 to FDI, Corporate, HNI's.
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Schneider Electric President Systems Limited is a designer, manufacturer and supplier of customized enclosure systems for over 30 years.
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