NISM Certifications · NISM-Series-XV: Research Analyst · Introduction to Securities Market
Which of the following best describes the grey market in the context of an IPO in India?
The grey market is an unofficial and unregulated market in which IPO shares or applications are traded before the shares list on an exchange. It is not recognised by SEBI or exchanges, so its premium is only a sentiment indicator and not a reliable predictor of listing price.
- AAn unofficial, unregulated market where IPO shares or applications are traded before listingCorrect
- BThe exchange segment where small companies are listed
- CA segment where only government securities are traded
- DThe market where FPIs trade outside India
Explanation
The grey market is an informal over-the-counter arrangement in which IPO allotments or applications are dealt in before listing. It is not recognised or regulated by SEBI or the exchanges. The grey market premium is only an indicative sentiment signal, not an assured listing price.
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