Grey market for IPOs revives as equity outlook brightens

Moneycontrol Bureau

With three fairly large sized initial public offerings (IPOs) set to open for subscription over the next few days, the grey market (unofficial market) for these issues has come alive. Traders tracking this market say the volumes are not as big as those seen during the bull run of 2007-08, but are a considerable improvement from the levels seen last year.

Also read: All IPO disclosures legally binding on companies: Sebi

Shares of PC Jewellers (price band: Rs 125-135) are quoting at a premium of Rs 24, and those of CARE are quoting at Rs 170 (price band: Rs 700-750), a grey market operator told moneycontrol.com.

There are no quotes for Bharti Infratel (price band:Rs 210-240) at this point, he said, adding that it was quoting at a premium of Rs 8 till yesterday.

The grey market for IPOs became inactive for a couple of years, following the market meltdown of 2008. Brokers said operators who had built up huge positions in the Reliance Power IPO reneged on their commitment when the issue flopped on listing.

Grey market trades are done on purely on faith, with the verbal transactions entered into the system once shares are credited in the demat system. (Catch more IPO news here)