International Research Journal of Engineering and Technology (IRJET)
e-ISSN: 2395-0056
Volume: 09 Issue: 04 | Apr 2022
p-ISSN: 2395-0072
www.irjet.net
Grey Market Premium and IPO Listing Gain Pinki1, Aryan2 1Assistant
Professor & Department of Commerce, B.P.R College, Kurukshetra, Haryana & Department of Commerce, B.P.R College, Kurukshetra, Haryana ---------------------------------------------------------------------***--------------------------------------------------------------------2Student
Abstract - Demand for Initial Public Offering ( IPO ) has
When the company issues an IPO, it decides the price band of the IPO itself. Now the company can keep it for more than its value and also less. A range of price bands is kept. which max. There is a price; we call it the cut-off price. When an IPO is oversubscribed, all apply at the cut-off price. If the company keeps a higher price band, then investors are less attracted to it. Since the lot size will be less than the higher price band, if the lot size is less, then the number of shares will be less. Due to this, the opportunities for listing gain will also be reduced.
been very high in the Indian market in 2021. Here retail investors have shown their great interest; the quota of retail investors is first oversubscribed on the very first day of an IPO. It is the right thing that people are investing their money in. But the thing to be seen is that the money people are investing, are they looking at the performance of the company or are they investing money by looking at some other thing? In this article, we will know what is an IPO in the primary market. When a new issue comes onto the market. So what is the problem in front of him? We are also a descriptive study of will, the grey market. What is premium and whether the listing price of IPO is known correctly from GMP or not? In this, we will study all the IPOs that have come from 1 November 2021 to 28 February 2022.
Retail investors just need to gain a listing in the IPO market in India. Now the question is whether we can first find out which IPO listing will give us a gain or not. By the way, if you see it right, GMP is illegal. GMP is such a market where, before the arrival of the IPO, its buying and selling starts. All this happens on trust and this price is updated on different websites like chittorgarh.com, www.ipowatch.in, etc. This rate changes every day according to the trade and as long as it keeps on changing, the listing of the IPO is completed.
India's market is an emerging one. There are still many opportunities to invest here. In 2021, we saw that retail investors have invested money here. Be it the IPO of any company, first of all, the retail section is full. From our research paper, it will be helpful to know whether listing can be gained by looking at the grey market. Does the price of the grey market affect the listing price of the IPO?
According to Investopedia 1. An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance. An IPO allows a company to raise capital from public investors. The transition from a private to a public company can be an important time for private investors to fully realize gains from their investment as it typically includes a share premium for current private investors. Meanwhile, it also allows public investors to participate in the offering.
Key Words: Grey Market Premium, Meaning of IPO, Listing Gain, Impact on Listing Gain, Cut-Off Price, Retail Investor View
1. INTRODUCTION
According to edelweiss 2. An initial public offering (IPO) is the first time a company issues shares to the public. This is when a private company decides to go ‘public’. In other words, a company that was privately-owned until then becomes a publicly-traded company. Before the IPO, a company has very few shareholders. This includes the founders, angel investors, and venture capitalists. But during an IPO, the company opens its shares for sale to the public. As an investor, you can buy shares directly from the company and become a shareholder.
The capital market of India is an emerging market. We divide the capital market into two parts, a primary market, and a secondary market. When a company issues its shares in the market for the first time. So we call it the primary market. Within this, the company's shares are traded in the market for the first time. When the company raises funds, this offer is called an initial public offering. There was a flood of IPO in India in 2021. To invest in an IPO, up to 15000 is needed. That's why retail investors invest a lot of money in this. The second biggest reason is, listing gain, all the people in the market today, just want to earn a listing gain. It does not matter to any investor, what the company does, and what is the management of the company. The investor just means by listing gain, he does not get any interest in the company.
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According to Bankrate.com 3. Ownership of a company is determined by stock. As a private company, the stock is owned by a small group of shareholders and is not offered to anyone else outside the company. In an IPO, those shares are either sold to the public or more shares are added for that purpose, which is called dilution. If more shares are
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