GMP (Grey Market Premium) is the extra amount, over and above the IPO price, that buyers are willing to pay for IPO shares in the unofficial "grey market" before the stock lists. A GMP of ₹120 on a ₹400 IPO implies an expected listing price of around ₹520. It is set by word-of-mouth dealers, not by any exchange, and it is not regulated.
Why it matters to you
GMP is a sentiment thermometer, not a forecast. It can swing wildly in the final days and has no settlement guarantee — many trades are purely notional. Treat it as one signal among many, never as a reason to overpay for unlisted shares ahead of an IPO.
Example: A widely-hyped IPO showed a ₹300 GMP a week before listing, then opened just ₹40 above the issue price — a reminder of how unreliable the grey market is. Read more in GMP and the grey market, explained.