IPO GMP: What is Grey Market Premium & Why It Matters
15 July 2025 · Sachin Gadekar
Understanding IPO Grey Market Premium (GMP) and How It Impacts Upcoming IPO Listings
What is IPO GMP
When it comes to IPOs (Initial Public Offerings), IPO GMP, or Grey Market Premium, is one of the most talked-about terms among retail investors in India. Before a company’s shares are officially listed on the stock exchanges, the grey market gives investors an unofficial glimpse into how the IPO might perform on listing day.
In this article by Ultra, India’s digital platform offering multiple investment opportunities, we break down what IPO GMP means, how it works, what impacts it, how reliable it is, and where to check the IPO Grey Market Premium today.
IPO GMP stands for Initial Public Offering Grey Market Premium. It is the premium amount at which shares of an upcoming IPO are traded unofficially before they are listed on the stock exchange.
For example, if the issue price of an IPO is ₹500 per share and the GMP is ₹100, then the grey market expects the IPO to list at around ₹600 per share (₹500 + ₹100).
What is Grey Market?
The grey market is an unofficial market where IPO shares are bought and sold before the stock gets listed on the NSE or BSE. Transactions in the grey market are purely based on mutual trust and have no regulatory backing by SEBI or the exchanges.
Why Do Investors Track IPO GMP?
Investors track the IPO Grey Market Premium today to get an idea of the possible listing gains. A high GMP indicates strong demand, while a low or negative GMP signals weak sentiment.
However, it is important to remember that GMP is unofficial and speculative. It does not guarantee the listing price.
How is IPO GMP Calculated?
There is no official formula. The IPO GMP today is determined by grey market dealers and small groups of traders who buy and sell IPO applications or shares based on demand, subscription data, company fundamentals, and overall market sentiment.
How Does Grey Market Trading Happen?
There are two common ways grey market deals work:
1. Trading IPO Shares: Traders buy and sell IPO shares before allotment and listing at a premium.
2. Subject to Sauda: Here, an entire IPO application is sold for a fixed profit if the allotment happens. If the investor does not receive an allotment, the deal is void
Is IPO GMP Reliable?
While the IPO grey market premium today can reflect market sentiment, it is not always accurate. Many factors impact the final listing price, such as:
Company fundamentals
Overall market trends
Global market conditions
Last-minute changes in investor sentiment
Hence, investors should not base their investment decisions solely on GMP.
Upcoming IPO GMP Trends
Many retail investors actively track the upcoming IPO GMP to decide whether to subscribe to an IPO or not. Stocks with high oversubscription often see strong grey market activity.
Some of the upcoming IPOs with active GMP discussions include:
SME IPOs
Mainboard IPOs in sectors like tech, pharma, and renewable energy
How Does Grey Market Impact Listing?
Although the grey market is unofficial, it can influence investor sentiment. If an IPO’s GMP is high, it often leads to more subscriptions, pushing up oversubscription numbers. This can create strong listing gains for lucky allottees.
However, if the GMP drops before the listing, investors may see a weaker-than-expected listing day.
Advantages of Tracking IPO GMP
Gives a rough idea of listing gains.
Helps investors gauge market interest.
Acts as an informal sentiment indicator.
Risks of Relying on IPO GMP
It’s an unofficial market, hence not regulated by SEBI.
Deals are based on trust; disputes have no legal recourse.
GMP can fluctuate wildly due to rumours.
Actual listing may differ due to market volatility.
Tips for Retail Investors
Use IPO GMP today as an indicator, not a guarantee.
Always study the company’s fundamentals, DRHP, and financials.
Diversify investments instead of chasing only GMP-based IPOs.
Beware of frauds in the grey market.
FAQs on IPO GMP
1. What is IPO GMP?
IPO GMP or Grey Market Premium is the extra amount at which IPO shares are traded unofficially before their listing.
2. Where can I check the latest IPO GMP today?
You can check reliable sources like IPO Watch, Chittorgarh, or Groww to track IPO Grey Market Premium today.
3. Is IPO GMP legal?
The grey market is unofficial and not regulated by SEBI, so transactions are done purely on trust.
4. How is GMP different from the listing price?
The GMP is just an estimate of listing gains. The actual listing price depends on market demand, fundamentals, and investor sentiment on the listing day.
5. Should I subscribe to an IPO based on GMP alone?
No. Always research the company’s fundamentals, DRHP, industry prospects, and financials along with GMP before investing
Conclusion
While IPO GMP is a useful indicator for understanding market sentiment for an IPO, it should not be the sole deciding factor. Use it as a guide, but always conduct your due diligence.
At Ultra, we help investors stay updated with the latest market trends and provide access to multiple investment opportunities to help you diversify your portfolio.
Check the latest IPO GMP today and discover upcoming IPO grey market trends.