What is Grey Market Price?
Grey Market premium (GMP) is the option of IPO available for trading on the stock exchanges. When an investor prefers IPO Share Market, the term Grey Market price comes to mind first.
It is like the summation of the listed stock price and IPO GMP price in the IPO Stock Market.
Accuracy of Grey Market Price
Grey Market Price is a type of prediction of the IPO. It depends on its first day of trading.
An Example: If a business fixes an IPO of Rs. 200, the Grey Market premium comes to around 32 Rupees. Then the expected IPO pricing for its first day of trading will be Rs. 232.
In most cases, GMP gets higher success and the majority of bids. Considering the accuracy of GMP, it is unpredictable but provides good results often.
Who Decides GMP & How?
It is the Securities Exchange Board of India (SEBI) that regulates and controls the Grey Market Price.
The determination of the Grey Market price in an IPO depends on the demand and supply of the stock. The pricing may decline if the IPO’s number of subscriptions is smaller than the number of allocated IPO shares.
Also, GMP gets a raise with a higher number of IPO subscribers at a sustained number of IPO shares.
How to Decide GMP?
The determination of the Grey Market price in an IPO depends on the demand and supply of the stock. The pricing may decline if the IPO’s number of subscriptions is smaller than the number of allocated IPO shares.
Also, GMP gets a raise with a higher number of IPO subscribers at a sustained number of IPO shares.
Advantages of GMP
The following benefits are assessed with GMP:
- Increase the interest among investors and businesses
- Hike a demand for a particular IPO
- Remove negativity
- Improved performance of IPO on listing day
- Maintain the stock market’s demand and supply chain
Can I Earn Money Through GMP?
Yes, an investor or business can earn money with the help of GMP.
In the IPO stock market, GMP acts as a major investment method. It depends on the strong demand for shares and stocks. Higher profit gives investors a great return.
However, the profit or loss depends on the type of role GMP plays, relevant to the company’s IPO.
Final Sentiment!
Dealers in the Grey Market play vital roles to decide its pricing. The premium price is higher than its issued price in this scenario.GMP is a key indicator in Online Trading. It creates major opportunities for investors to gain profit or bear the loss. That’s why it is called an uncertainty investment method.