Amid the busy IPO season, grey market is losing ground. Here's why

New Delhi: As it continues to rain IPOs and the secondary market continues to remain volatile, the premia in the grey market for listing-bound companies are largely diminishing.

Rising concerns over the Omicron variant, rampant correction, hawkish views from the Federal Reserve and inflation worries have spooked the unofficial market. However, dealers tracking the grey market said some of the companies were losing ground due to their pricey valuations, fewer subscriptions and other issues.

Start Health and Allied Insurance Company is trading at a discount of Rs 75-80, about 8-10 per cent below its price band of Rs 870-900. The company is scheduled to be listed on Friday.

Anand Rathi Wealth, whose IPO was concluded on Monday, is commanding a premium of merely Rs 18-20 over its price band of Rs 530-550, which was Rs 105-110 when the issue was announced.

Abhay Doshi, co-founder, UnlistedArena, said both Star Health and Anand Rathi Wealth were expensive buys and failed to attract the larger chunk of the investors. "Furthermore, sentiments in the broader markets have been jittery recently, thanks to the potential threat of the Omicron virus. The market activities have dipped due to rising selling pressure," said the avid grey market tracker.

Another listing candidate, Tega Industries, is also losing its ground in the unofficial market. The company's premium in the grey market has trimmed to Rs 310-320 from Rs 450-460 within a week. Tega Industries witnessed historic subscription from institutional buyers and was subscribed 219 times. It is likely to debut on the bourses on Monday, December 13.

Among the latest listing candidates, RateGain Travel Technologies and MapmyIndia, both software as a service (Saas) players, are active in the unofficial space so far. RateGain Travel is fetching a mild premium of Rs 55-60 over its issue price of Rs 405-425, whereas MapmyIndia is boasting a hefty premium of Rs 800-810 over its issue price of Rs 1,000-1,033.

Will the sentiments for IPOs and primary markets improve? And, will the premium of issue be likely to shoot higher in the busy week ahead?

Analysts do not think so. Improvement in the secondary market might cushion a further downfall, but a rapid rise from the current levels of the GMP was unlikely, the market watchers said.

Dinesh Gupta, co-founder, UnlitedZone, said the numbers of buyers has trimmed in the markets. Neither the FIIs or the HNIs were actively buying right now. Investors have learnt their lessons from Paytm and Start Health, he said. "There are multiple issues in the pipeline and investors have to pick and choose from the issues,” he added. "Funds are limited and will be distributed among the issues, pinching the grey market."