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How Grey Market Premium Works

What GMP means, how it's estimated, and why it should never be your only reason to apply for an IPO.

What is GMP?

Grey Market Premium is the extra amount buyers are informally willing to pay over an IPO's issue price, before the shares are officially listed. It trades in an unregulated, over-the-counter "grey" market that operates outside recognised stock exchanges.

How is it estimated?

Informal dealers and intermediaries quote a price at which they are willing to buy or sell IPO applications or shares ahead of listing. These quotes are collected from local markets and aggregated into the "GMP" figure you see on tracking sites.

GMP % formula

GMP % = (GMP ÷ Upper Price Band) × 100. It's a quick way to express the premium as a percentage rather than a rupee value.

Why GMP can be misleading

  • It is not tracked, verified or regulated by SEBI or any exchange.
  • It can swing sharply in the final day or two before listing.
  • It reflects sentiment among a small set of participants, not the full market.
  • A high GMP does not guarantee listing gains, and a low or negative GMP does not guarantee losses.

How to use it sensibly

Treat GMP as one small data point alongside subscription numbers, financials, and valuation — not as investment advice on its own.

See Today's Live GMP →