Grey market buzzing with flurry of public issues, improved sentiment
initial public offerings (IPOs) is buzzing with activity once again as a flurry of public issuances and improvement in investor sentiment have revived speculators' interest in soon-to-be-listed shares.
Grey market premiums (GMPs) — the additional price investors are willing to pay over the IPO price in the grey market before the stock lists on the exchanges — of five IPOs are trading at 8-44% above the issue prices, according to sources. A higher premium indicates the market sentiment for the IPO in question. GMPs of IPOs with robust demand tend to be high, which implies a potential upside in the stock on listing.
«The sharp rebound in grey market premiums is driven by strong listings of recent IPOs and a new wave of investors focused solely on IPOs to capitalise on quick gains,» said Narottam Dharawat of Mumbai-based Dharawat Securities.
The ₹840-crore IPO of investment bank DAM Capital Advisors is currently commanding a grey market premium of ₹120, or 42% more than its upper price band of ₹283 per share. The ₹839 crore IPO of Transrail Lighting has a grey market premium of 30% over its issue price of ₹432 per share. Mamata Machinery, a smaller public issue, is trading at a 45% premium in the grey market over its issue price of ₹243 per share.
The grey market activity in the primary market had subsided following the sell-off in the market starting late September. Money managers said the BJP-led coalition's victory in the Maharashtra elections has stabilized the market.
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