Grey Market Premium: The Insider's Guide · Chapter 1 of 10
What is Grey Market Premium?
The basic idea
The grey market premium (GMP) is the extra amount, over the issue price, at which shares of an upcoming IPO are said to be dealt informally before they list. A GMP of ₹30 on an issue priced at ₹200 implies an expected listing near ₹230, a premium of 15%.
Why it gets attention
It is the only widely quoted, forward-looking number about an IPO's listing, so every IPO news page shows it. Applicants use it to decide whether to apply, and some use it to decide when to sell.
What it is not
It is not an official price, a forecast guaranteed by anyone, or something SEBI or the exchanges publish or approve. It is a rumour-grade indicator that happens to be correct often enough to be popular.
Premium, discount and zero
A positive GMP means the grey market expects a listing above the issue price, a negative GMP a discount, and zero a flat listing. Many issues show no GMP at all because there are no quotes.
How this book is organised
Ten short chapters explain how the grey market works, how to read a quote, what moves it, how it relates to subscription and listing, where it misleads, and how to use it responsibly.
Key takeaways
- GMP is an informal premium over the issue price.
- It is widely quoted but unofficial.
- It is not a guarantee of the listing price.
- A missing GMP is not the same as a zero GMP.