IPO GMP Guide: Today’s GMP, Meaning, Accuracy & Trends

Every IPO investor has become GMP-obsessed lately – and you can’t blame them. Whether it’s on Google search results, WhatsApp groups, Telegram channels, or finance YouTube, one number keeps popping up before every big listing: IPO GMP, or Grey Market Premium. In fact, even on Google Trends ‘GMP’ and the ‘GMP of ongoing IPOs’ are almost always the trending keywords in India under finance category.

IPO GMP (grey market premium), as the name suggests, is literally the premium investors are willing to pay for an IPO in the unregulated grey before the stock gets listed on NSE or BSE. While it is not any official number, not does it guarantee anything, it gives an indication of investor sentiment of that IPO. Think of it as an early pulse check, or how excited the market is for that IPO.

For instance, if an IPO is priced at ₹500 and the GMP in the grey marketplace is ₹100, then it means that people in the grey market are willing to pay ₹600 for that share.

This makes many investors assume: “If GMP is high, listing gains will be high too.”  

In brief, GMP reflects the demand and hype around an IPO even before it formally is going live at the stock trade.

IPO GMP is driven by unofficial trades between investors. It has nothing to do with stock exchanges or SEBI.

GMP changes based on: 

• Subscription numbers
• Market mood
• Company buzz or IPO hype
• HNI & QIB demand
• Recent IPO listings

If more people want to buy the IPO unofficially, GMP goes up. If demand falls, GMP goes down.

Let’s say company XYZ launches its IPO at a price band of ₹510- ₹593. You find out from the street that the GMP of XYZ IPO is ₹109.

Here’s how you will calculate the listing gain using GMP (and its actually very easy):

Listing Price = Issue Price + GMP

In this example, the upper band of the IPO is ₹593. So, the listing price will be ₹702 
(₹593 + ₹109). And the listing gain in percent will be:

Listing Gain % = (GMP / Issue Price) × 100

= (109 ÷ 593) × 100 
= 18.38%

Does this mean the listing gain is guaranteed? Absolutely not. But it’s a hint of market mood. 

GMP increases when:

• QIB demand is strong
• Market is bullish
• Company is well-known
• Sector outlook is positive
• Financials are strong

GMP decreases when:

• Market falls
• Pricing looks expensive
• Subscription slows down
• Negative news hits the market
• Traders exit positions

GMP is extremely sensitive to market sentiment. 

Think of GMP as the movie trailer — not the entire movie. While GMP can give you an hint of market perception about the IPO it doesn’t tell the whole story. Use GMP only as a sentiment indicator. To make a sound investment decision, you will need to combine it with fundamentals, past financial performance, business strength, valuations, and overall market mood.

Use GMP only to estimate listing direction — not to judge long-term value. 

In addition to GMP, kostak and subject to sauda are also grey market indicators, commonly used by IPO investors.

• Kostak Rate: Price at which you can sell your entire IPO application unofficially.
• Subject to Sauda: This value is paid only if you get allotment. Higher sauda value = higher expected oversubscription. 

Before relying on GMP, always look at:

• QIB subscription (Very important)
• sHNI subscription
• Sector performance
• Company fundamentals
• Valuation
• Market conditions on listing day

If all these indicators are positive, listing chances improve. 

Advantages

• Quick idea of demand
• Helps traders plan listing strategy
• Shows sentiment before the stock lists
• Useful for short-term listing gain decisions

Limitations

• Not regulated by SEBI
• Can be manipulated
• It changes quickly as sentiments in the market flip
• Does not reflect the company’s fundamentals
• May not match actual listing price 

A rising GMP usually signals: 

• Strong demand 
• High HNI interest 
• Expected positive listing

A falling GMP usually signals:

• Weak interest 
• Overpriced IPO 
• Volatile market 

Q1. What is IPO GMP in simple words?

IPO GMP is the extra unofficial premium at which IPO shares are traded before listing.

Q2. Is IPO GMP important for investors?

Yes, it helps estimate demand and possible listing gain, but should not be the only decision factor.

Q3. Does GMP guarantee listing gain?

No. Listing depends on subscription, market sentiment, and global factors.

Q4. How is IPO GMP calculated?

GMP is added to the IPO price to get the estimated listing price.

Q5. Why does IPO GMP change daily?

GMP moves with subscription numbers, market mood, news flow, and trader activity.

Q6. What is the difference between GMP and Kostak?

GMP is per-share premium, while Kostak is the premium for selling an entire IPO application.

Q7. Can GMP be negative?

Yes. A negative GMP means expected listing at a discount.

Q8. Is GMP legal in India?

It is unofficial but not illegal. It operates outside SEBI regulation. 

IPO GMP is a popular and useful indicator to understand how well an IPO is expected to perform on listing day. It shows demand, sentiment, and unofficial market expectations. 
But investors should use it along with fundamentals, subscription data, and market conditions for a clear decision.