Question 1

What is IPO Grey Market Premium (GMP)?

Accepted Answer

IPO Grey Market Premium (GMP) is an unofficial, over-the-counter premium over the issue price that dealers and investors pay prior to official listing on NSE/BSE.

Question 2

How is estimated IPO listing price determined?

Accepted Answer

Estimated Listing Price = Cut-off / Issue Price + Current Grey Market Premium (GMP). For example, an issue price of ₹100 with ₹40 GMP yields an estimated listing price of ₹140 (+40%).

Question 3

What is Kostak rate in an IPO?

Accepted Answer

Kostak rate is the fixed profit earned by selling an IPO application before allotment, irrespective of whether the application is allotted shares or not.

Question 4

What is Subject to Sauda in IPO trading?

Accepted Answer

Subject to Sauda is an informal contract where payment is made only if the seller receives share allotment in the IPO.

Question 5

Is IPO Grey Market Premium (GMP) regulated by SEBI?

Accepted Answer

No. Grey Market transactions are non-exchange over-the-counter commitments and are not officially regulated or endorsed by SEBI. Investors should treat GMP as an informal sentiment indicator.

Sai Swami Metals & Alloys Limited

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