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From GMP and Kostak to allotment odds and listing day - everything you've wondered about IPOs, explained without the jargon. Updated for 2025.
GMP is the per-share premium that buyers in the unofficial grey market are willing to pay above the IPO issue price - before the stock is officially listed on NSE or BSE.
Think of it as the market's early verdict on an IPO. If the issue price is ₹200 and GMP is ₹60, the grey market expects the stock to open around ₹260 - a 30% gain on listing day.
Formula: Expected Listing Price = Issue Price + GMP
But here's the thing GMP is completely unregulated. It can swing 50% overnight based on subscription data or broader market mood. A high GMP doesn't guarantee a strong listing. Treat it as a sentiment signal, not a promise.
Kostak is the amount someone in the grey market pays you for your IPO application regardless of whether you get allotment or not.
Say Kostak is ₹800 on an IPO. A grey market dealer offers you ₹800 for your application. You accept, transfer the application details, and pocket ₹800 upfront. Whether you get shares or not, the ₹800 is yours.
A high Kostak (₹1,000+) signals intense grey market demand. Kostak near zero? The market is lukewarm at best.
Note: Grey market transactions are unofficial and not protected by any regulator. Participate at your own risk.
Sub2 (Subject-to Sauda) is like Kostak but with a condition: you only get paid if shares are actually allotted to you.
Because of the allotment risk, Sub2 rates are usually higher than Kostak. Example: if Kostak is ₹500 and Sub2 is ₹1,200 on the same IPO, you can either take ₹500 guaranteed (Kostak) or bet on allotment and collect ₹1,200 if lucky.
Sub2 is more common in highly oversubscribed SME IPOs where allotment probability is low but listing gains are expected to be large.
Seller Only means there are people trying to offload IPO shares or applications in the grey market, but no buyers are willing to step in at any price. It's essentially a lower circuit situation.
This typically indicates: weak subscription numbers, poor company fundamentals, or a sudden drop in broader market sentiment.
IPOs with Seller Only GMP in the days before listing often open at or below issue price. Not always but it's a meaningful warning sign. If you see Seller Only GMP on an IPO you applied for, it's worth revisiting whether to sell on listing day or hold.
GMP has a decent directional accuracy for well-subscribed IPOs but it's far from reliable enough to bet on. We've seen IPOs with 100% GMP list flat, and IPOs with negative GMP surprise everyone with 40% gains.
Use GMP alongside:
GMP alone should never drive an investment decision. It's a pulse check, not a forecast.
The simplest way is through your broker's app using UPI-based ASBA. Here's how it works:
If allotted, shares arrive in your Demat account on listing day. If not, the block is released within 1-2 business days.
You need: Demat account + bank account with UPI + PAN linked to Demat.
ASBA (Application Supported by Blocked Amount) means your money doesn't leave your bank account, it's just blocked until allotment is decided.
Before ASBA, you'd write a cheque and hand over money upfront. Refunds took weeks and some companies misused the funds. SEBI made ASBA mandatory in 2016 to fix this.
Practical benefit: You continue earning interest on blocked funds. For large applications (₹2L+), this adds up over the 6-8 day IPO cycle.
SEBI mandates that the minimum retail application size be between ₹10,000 and ₹15,000. In practice:
Minimum investment = Lot Size × Upper Price Band. Check each IPO's price band table on IPORise for the exact amount.
| Feature | Mainboard | SME |
|---|---|---|
| Exchange | NSE / BSE Main | NSE Emerge / BSE SME |
| Issue size | ₹100 Cr+ | ₹10–100 Cr |
| Min. investment | ~₹15,000 | ₹1–1.5 lakh |
| Liquidity | High | Low to moderate |
| Risk level | Moderate | Higher |
SME IPOs can deliver outsized returns but come with higher risk smaller companies, less disclosure, and lower post-listing liquidity. Always read the DRHP before applying.
Allotment status is announced 1-2 days after IPO subscription closes. Three easy ways to check:
You'll also get an SMS/email confirmation. If not allotted, the blocked amount is released within 1-2 business days.
You can also check allotment status directly on our IPO Calendar - we link to registrar allotment pages.
Retail allotment in popular IPOs is a lottery. Every valid application for 1 lot gets one lottery ticket - regardless of how many lots you apply for. So applying for 14 lots vs 1 lot gives you the same chance of getting at least 1 lot.
At 50x oversubscription, roughly 1 in 50 applicants wins the lottery. At 100x, it's 1 in 100.
The only way to genuinely improve your odds: apply from multiple family members' accounts - each gets a separate lottery ticket.
For NII (HNI) applications above ₹2 lakh, allotment is proportional - more money = more allotment. But the minimum lot threshold changes frequently, so check the RHP.
SEBI divides IPO shares into three buckets:
SME IPOs have different ratios - typically 50% retail, 50% NII/QIB combined.
SME IPOs are structurally harder to get allotment in because:
Result: roughly 1 in 100 retail applicants gets allotment. For context, Mainboard IPOs often have 1 in 5–10 odds.
IPOs list on NSE and BSE 6 business days after subscription closes (T+6 timeline, recently changed by SEBI from T+10).
On listing day:
If you got allotment and want to sell, you can place sell orders during pre-open or at market open. There's no lock-in for retail investors - you can sell immediately.
If you didn't get allotment, you can buy the stock post-listing like any other share - but wait for the initial volatility to settle.
There's no universal answer - it depends on why you applied in the first place.
Sell on listing day if: you applied purely for listing gains (IPO flipping), GMP has been falling in the days before listing, or the broader market is weak.
Hold if: you believe in the company's long-term story, the IPO was priced conservatively relative to peers, or QIB interest was very strong (suggests institutional holding).
One practical tip: if you're unsure, sell half on listing day to lock in gains and hold the rest. This removes regret either way.
Retail investors have no lock-in - you can sell your allotted shares the moment trading begins on listing day.
Lock-in applies to:
Large anchor/promoter lock-in expiry dates are worth tracking - heavy selling sometimes happens when locks expire.
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