What is GMP? Understanding Grey Market Premium in IPOs

What is Grey Market Premium (GMP)?

Grey Market Premium (GMP) is the unofficial price at which IPO shares are traded before listing on stock exchanges.

Example of GMP

If IPO price is ₹100 and GMP is ₹50, expected price is ₹150.

How GMP Works

• High demand → GMP increases
• Low demand → GMP decreases

Listing Price Formula

Expected Listing Price = Issue Price + GMP

Is GMP Reliable?

• Useful for sentiment
• Not 100% reliable

Conclusion

Use GMP as an indicator but always check fundamentals before investing.