Do Not Call
Discover how grey market premiums reflect listing sentiment and what investors can learn from them.
Grey market premium (GMP) offers a lens into investor expectations before an IPO officially launches. This page explains what GMP is, how it works in pre-listing markets, its relevance and limitations, and how investors can interpret it cautiously. The content provides an informed view of GMP’s role without suggesting any investment action, and it clarifies why this informal metric attracts interest among self-directed investors.
Gain a detailed view of how GMP fits into the IPO ecosystem and builds pre-listing sentiment.
GMP indicates the unofficial price difference between a grey market quote and the IPO issue price. It reflects how much buyers are willing to pay above (or below) the issue price before the IPO opens on exchanges.
For instance, if the IPO price is ₹100 and GMP is ₹20, grey market quotes suggest an expected listing price of ₹120.
GMP (₹) = Grey Market Price − IPO Issue Price
Example: If the IPO price is ₹100 and the grey market price is ₹120,
GMP = ₹20
Expected Listing Price = IPO Issue Price + GMP
Example: ₹100 + ₹20 = ₹120
GMP can be checked through IPO tracking websites, stock market forums, and updates from unofficial dealers or brokers. Since it’s part of an unregulated market, GMP figures may vary and should be viewed as an indicator of market sentiment, not guaranteed returns. Always cross-check from multiple reliable sources for accuracy.
GMP: Refers to the price premium of IPO shares in the unofficial market before listing.
Kostak: Refers to the price of selling an IPO application (allotment rights) in the grey market, regardless of whether shares are allotted or not.
While GMP reflects expected listing gains, Kostak is a fixed amount paid to the applicant for transferring application rights.
Grey market premium provides a snapshot of investor expectations before IPO listing. It offers insight into sentiment but lacks formal validation and can fluctuate. Investors should treat it as one piece of a larger puzzle—integrating it with verified data, subscription updates and fundamental research—while always maintaining analytical caution.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
Grey market premium arises from informal expectations about demand, company fundamentals, and market mood before listing. It is not tied to formal exchange activity.
No. GMP reflects investor sentiment before listing, while listing gains emerge from actual trading once the IPO launches.
GMP can reflect initial enthusiasm, but it does not guarantee listing gains or long-term performance of the stock.
GMP quotes can be found through broker forums, financial news outlets, and credible pre‑IPO discussion platforms, though they vary across sources.
Not necessarily. It may indicate muted pre‑listing sentiment, but actual outcomes often differ based on fundamentals and broader demand.
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