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What is Grey Market and Grey Market Premium – Explained

Apart from stock exchange, Grey Market IPO is another available concept of trading. Let's learn all about the Grey Market and
Apart from stock exchange, Grey Market IPO is another available concept of trading. Let’s learn all about the Grey Market and the Grey Market Premium.


  1. Introduction
  2. What is Grey Market?
  3. What is Grey Market Premium?
  4. What are Kostak rates?
  5. What is the subject to Saudas?
  6. Some popular IPOs


Some of us thrive on thrill; some get it through adventure sports, some through car racing and some through Trading. Trading is one of the most exciting ways to earn money. The enormous profits made by an expert trader is evidence of the success of trading as a full-time job. The official trading is done with shares on the stock exchange, but we have another concept of trading available for us, called Grey Market IPO. Yes, in this article, we will learn all about the Grey Market. What is it? And How it works?

What is Grey Market Premium?

IPO Grey Market is a market where the selling and buying of shares are done even before they are even on the market. It is an unofficial market which is formed by trusted investors. The deals are made through a broker trusted by both parties. The shares bought and sold here are the ones that have not been released officially on the stock exchange.

It is a counter where deals are hatched for preferred or select customers. The IPO Grey Market is an unofficial way of securing shares. This practice is done among a small group of people who trust each other because this method has no defined set of rules, just blurred lines. All the transactions involved are on a personal basis. SEBI, Brokers and Stock Exchange do not involve themselves in it.

Trading in Grey Market includes buying or selling of IPO applications at a particular rate and buying or selling of allocated shares before they are officially available on the Stock Exchange. To keep yourself updated, Chittorgarh Grey Market is the best stop online.

What is Grey Market Premium?

Grey Market Premium is also called the Grey Market Price. It is the amount at which the shares are being traded in the Grey Market before they are available on the stock exchange. The amount of shares is dealt with in rupees. IPO Grey Market Premium has two values it can attain, one positive, and the other negative. Both of these are dependent on the supply and demand of the stock. Grey Market Premiums often use words buyers and sellers. It tells the rate at which the buyer is ready to buy and the rate at which the seller is prepared to sell.

The Grey Market Premium sometimes helps in predicting IPO reaction when the stock will be listed. Most of the time, if an organization has set the IPO at Rs. 100, and the Grey Market Premium happens to be Rs. 20, then the value on the listing day is near Rs. 120. There is no reliability in this type of prediction, but this pattern is generally observed.

What are the Kostak Rates?

Athe Kostal Cost or rates is the payment done to join IPO application before it is listed. The Kostak rates react the same way as Grey Market. A person can sell their complete IPO application on Kostak rates. If a person made 3 applications for an IPO and wants to sell them at Rs. 2000 each, he will earn a profit of Rs 6000. Even if 2 of its three applications are allocated, his profit will be the same.

What is subject to Sauda?

According to the Kostak cost, the subject to Sauda is the amount decided to get firm allotment on the application. It acts as a pact; the buyer or seller can get his presented amount only if he gets allotment or else the Deal/Sauda will be canceled. If the person receives an allocation, they can sell it for Rs 10000. If the profit is Rs 15000 on the day of listing, they have to give Rs 5000 to the person who bought the application.

1. CDSL IPO Grey Market

CDSL (Central Depository Services (India) Limited) is an IPO popular in Grey Market. BSE supports CDSL. It is a depository service that deals with account-related tasks. Opening and closing of accounts, materialization or dematerialization of account, etc. All the account updates are notified to the owner through SMS or emails. The company is also involved in e-voting, e-locker services.

2. HUDCO IPO Grey Market

HUDCO (Housing and Urban Development Corporation) is a government-owned organization. It is a PSU entirely under the authority of the Ministry of Housing and And Urban Poverty Alleviation.

It came into existence in 1970 and has done thousands of crores rupees worth projects for the government of India.

3. SBI Cards and Payment services

SBI Cards or SBI Cards and Payment services is a payment solution firm. It was established in 1998 by the State Bank of India. The service is headquartered in Delhi, NCR. It has several branches across India.