Grey Market Premium (GMP)
Grey Market Premium (GMP) is the premium price at which an IPO's shares are traded in the unofficial (grey) market before they are formally listed on the stock exchanges (BSE or NSE). It acts as a primary indicator of public demand and expected listing gains.
Why it matters
A positive GMP suggests high demand and potential listing gains, whereas a negative or zero GMP indicates weak demand and potential listing losses.
Common Questions about Grey Market Premium (GMP)
Is Grey Market Premium legal in India?
No, GMP is part of the unofficial grey market. It is not regulated or recognized by SEBI (Securities and Exchange Board of India). Bidding in the grey market is done entirely at the investor's own risk.
How is GMP calculated?
GMP is driven by demand and supply in the unofficial market. For example, if the IPO issue price is ₹100 and the grey market trades it at ₹130, the GMP is ₹30 (30% premium).