Grey market premium is the amount above the issue price at which an IPO application, or an allotted share, is reported to change hands before the shares list. An issue priced at ₹100 with a reported GMP of ₹20 is being spoken about at around ₹120.
That word reported is doing a great deal of work, and it is the whole point of this page.
Where the number comes from
There is no exchange, no order book and no published volume. The grey market is a network of dealers, largely in a handful of cities, making informal agreements over the phone. A figure becomes "the GMP" when aggregators ask their contacts what is being quoted and publish the answer.
So a GMP is a reported price, not a measured one. Nobody can tell you how many trades it represents, whether they settled, or whether the same handful of participants set every quote.
Kostak and subject-to-sauda
Two related figures often appear beside GMP:
- Kostak — a fixed amount paid for an application, whether or not it receives an allotment. It prices the application itself.
- Subject-to-sauda — a price agreed for an application that is paid only if shares are allotted. It prices the outcome.
Both are informal arrangements with the same absence of enforceability as the premium itself.
Why the number moves, and why it can mislead
A small market moves on small volume. A handful of quotes can shift a published GMP substantially, and the figure tends to be at its most enthusiastic exactly when an issue is most talked about — which is also when it is most likely to be wrong.
There is also a reflexivity problem worth naming. GMP is published, retail applicants read it, subscription responds, and the higher subscription is then cited as evidence the GMP was right. Some of what looks like predictive power is the number describing an expectation it helped create.
What the record shows
Rather than argue about this, we publish it. Every listed IPO we track has its implied premium recorded against what it actually listed at, including the direction — whether the grey market was even right about premium versus discount, which is a lower bar than the exact number and a more meaningful one.
That record is on the scoreboard, misses included. It is the only page here that can make our own data look bad, which is precisely why it exists.
Reading a GMP sensibly
Treat it as one unverified sentiment reading among several, alongside subscription figures, which are official and published by the exchange. Where two sources disagree sharply, the honest conclusion is that the number is unknown — not that one of them must be right.
Today's reported premiums, with disputed figures flagged, are on the IPO GMP page.