Grey Market Premium
The unofficial price above an IPO's issue price at which its shares are quoted in an informal, unregulated market before listing.
Formula
Grey Market Premium = Unofficial Quoted Price - IPO Issue Price
Unit
₹
In depth
The grey market is not an exchange, not regulated by SEBI and not enforceable — quotes come from a small circle of dealers and are settled on trust. Because the volumes behind a quote are tiny and undisclosed, the number is easy to move and carries no reliable information about listing demand. It is widely reported as though it forecast the listing price, and it frequently does not; a large premium has repeatedly preceded a flat or negative listing. Treating GMP as data rather than as sentiment gossip is where retail applicants most often go wrong.
Worked example
An IPO priced at ₹300 shows a grey market premium of ₹90, implying a listing near ₹390, a 30% gain. If sentiment turns between the close of the issue and listing day, the same IPO can list at ₹285 — a 5% loss — with the quoted premium having promised nothing enforceable.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Grey Market Premium” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.