The IPO of One97-owned Paytm was oversubscribed by 189 per cent in three days of bidding from November 8th to 10th, 2021. Issue cost is the price at which shares are made available for purchase officially listed on the stock. The premium that investors are supposed to pay over the particular cost is called the Grey Market Premium (i.e. GMP).
Paytm has technically set a date for IPO, which will take place on November 8th 2021. The bidders’ response to the value of public issue at Rs 18,300 crores was ‘not very encouraging,’ which influenced the GM. In the grey market today, shares are pretty available at a premium of around $30. The retail quota is about ten per cent, with QIB at approximately seventy-five per cent and HNI at around 15 per cent.
What is Grey Market?
There is an unregulated over-the-counter market for trading IPO apps or IPO shares before launching the stock on a grey market store. A small firm is a specific corporation, even if they are not authorized dealers in the market, which is an example of a grey market.
It is for many dealers to help their consumers who preferably wish to sell their named home before it goes on the market. A black market of variety issues commodities smuggled into the country to avoid paying import duties and other fees.
Because stocks are bought and sold in the stock market, there is a parallel market. The IPO grey market has two types of transactions present, and one of them is the trade of IPO shares at a grey market premium, i.e. GMP.
What is GMP stand for?
In the IPO grey market, the grey market premium is standard. The Grey Market Premium is the avail price at which many IPO stock shares are entirely exchanged in the particular grey market. The grey market premium, according to market observers, reflects the grey market’s predicted listing gain.
The Paytm IPO GMP today is around 30, which is gives an idea that the grey market which reasonably thinks that the Paytm IPO to list at roughly about 2180 ( to sum up 2150 + 30), which is so close to the Paytm IPO price band of given 2080 to 2150 per equity share. The IPO grey market is unofficial wherever investors can buy and sell some of the IPO shares or applications before they are officially launched or released for trading on the particular market.
“Considering the TTM ( happened in June 2021) Sales of around 31,420 million on the post-issue basis, the business is nothing but going to list at a Market Valuation or many Sales of around 44.36 with a market cap of like 13,93,788 million,” likely said Saurabh Joshi, A Research Analyst at Marwadi Shares and Finance Limited. The GMP, on the other hand, will be more significant if the number of subscribers exceeds the number of stocks given in the IPO. There are no publicly traded corporations in India whose operations are manageable to the company’s”
GMP for Paytm’s IPO
Paytm’s IPO grey market premium (GMP) today is $30, according to market researchers, and it has an unaltered GMP, i.e. grey market premium. GMP considers how the IPO would perform on its first day of trading. According to them, the Paytm IPO grey market price was 55 yesterday morning and has since dropped to 30 due to a lack increment some bidder action to the PO.
Typically, investors said that the Paytm IPO GMP dropped from 130 to 30 in just one week, reflecting the public specifical problem’s par listing.
Conclusion
The grey is an unofficial market. For the average investor, the grey market predicts how a stock will do after it is listed. Because it is a fair indicator of IPO demand, the GMP may be considered a signalling device. However, due to the nature of the grey market, and the GMP will be manipulated.
Article Proofread and Edited by Shreedatri Banerjee
