What is Grey Market Premium (GMP)?
Grey Market is the unofficial market for trading in shares of companies that have announced their initial public offerings and will be getting listed on the stock exchanges shortly.
Grey Market Premium is the premium the IPO demands on top of the issue price in this unofficial market, with the expectation that that listing price will be above the sum of its issue Price and the market premium. (e.g. Issue Price is 100, GMP is 25 indicates that listing price could be over and above 125). However, it’s not always the case and need not be true, especially when the demand for the IPO is not very high. There could be a high chance of market manipulation in these scenarios considering the unofficial nature of this market.
Grey Market Premium of latest IPOs
Note: We neither trade nor encourage our readers to trade in the Grey Market. We share the GMP information for educational purposes only, so that, you can make an informed decision.
|Company||GMP||GMP (%)||Market Demand|
|Data Patterns||500 – 550||~95%||–|
|Medplus||300 – 330||~40%||Subscription|
|MapmyIndia||750 – 800||~75%||Subscription|
|Shriram Properties||20 – 25||~20%||Subscription|
|RateGain Travel||70 – 75||7%||Subscription|
Historical Grey Market Premium
Is Grey market a legal market?
No, it is not. You transact in a grey market at your own risk. Its not governed by SEBI or any other legal entity
Why does a grey market for IPOs exist?
The grey market is kind of a signaling mechanism and tells the market about the demand for a particular IPO. Because of its very nature, there is a good possibility that this market can be easily manipulated. Nobody has a record of how many shares are traded in the grey market and at what price. If the IPO is hugely popular, the grey market prices are usually a fair indicator of the demand for the issue. But if the company is not renowned, the investment banker to the issue will strike deals at prices which gives an impression of heavy demand for the IPO.
More often than not, the price at listing is close to that at which the shares are traded in the grey market.