Grey Market Premium: The Insider's Guide · Chapter 4 of 10

What Moves the GMP

Business and valuation

Good growth at a reasonable price and a recognisable brand help; an aggressive valuation hurts, however popular the sector is.

Subscription

Strong institutional demand on the last day usually lifts the premium, and weak demand lowers it. This is why the final day is the most important for GMP watchers.

Market mood

A falling market can erase a premium in a day, while a rising one can add to it. Global cues and index moves feed directly into expected listing prices.

Supply on listing

Heavy selling by existing shareholders, or a large OFS, creates expected supply on listing and often caps the premium.

News and rumour

Regulatory headlines, results of similar companies and social-media chatter can change sentiment quickly, and the grey market reacts faster than fundamentals do.

Key takeaways

• GMP reflects expectations about demand and market mood.
• Last-day subscription often drives it.
• Market direction can overwhelm company-specific factors.
• Large selling by existing holders usually limits the premium.

Next: Chapter 5. GMP, Subscription and Listing: The Relationship