What It Means
GMP, or Grey Market Premium, is the extra amount buyers are willing to pay over an IPO's official issue price, in an informal market that runs before the stock actually lists on the NSE or BSE. It's unregulated: SEBI, NSE, and BSE don't recognise or enforce any part of it.
Example
An IPO priced at ₹350 a share is quoting a GMP of ₹45. Add the two together and the estimated listing price works out to ₹395, about a 12.9% premium. That number is an informal estimate from a loose network of traders, not a quote from the exchange or a price any broker will guarantee.
Warning
A high GMP doesn't guarantee listing gains. Paytm's 2021 IPO had a positive GMP right before listing and still listed 9.3% below its issue price.
Related Terms
- Kostak Price: the flat fee quoted alongside GMP for the application itself
- Subject to Sauda: the allotment-contingent grey market deal quoted alongside GMP
- QIB (Qualified Institutional Buyer): QIB demand is one of the biggest drivers of GMP
- What Is GMP in IPO? Should You Trust Grey Market Premium?: the full explainer, including whether GMP is actually reliable