What is IPO GMP?
Grey Market Premium (GMP) is the unofficial price at which IPO shares are traded before they are listed on stock exchanges like NSE or BSE. This trading happens in an unregulated, informal market commonly called the grey market or kostak market. SEBI does not regulate these transactions, and there is no legal protection for buyers or sellers.
How is GMP Calculated?
GMP is typically quoted as a premium over the IPO issue price. For example, if a company sets its IPO price at ₹200 per share and the grey market premium is ₹50, the expected listing price is ₹250. The percentage GMP would be 25% in this case.
- Expected Listing Price = Issue Price + GMP
- GMP % = (GMP / Issue Price) × 100
Grey market dealers — often called hawaladars in informal investor circles — set these rates based on demand signals, subscription numbers, and general market sentiment.
Where Does GMP Data Come From?
GMP is sourced from informal networks of brokers, dealers, and investors who actively participate in pre-listing trading. Websites like IPOpulse collect and track GMP trends daily, usually sourced from multiple grey market operators across cities like Ahmedabad, Mumbai, Surat, and Jaipur — known hubs for grey market activity.
Should You Trust GMP?
GMP is a sentiment indicator, not a guarantee. Historically, there is a moderate correlation between high GMP and strong listing gains — particularly for heavily oversubscribed mainboard IPOs. However, GMP can shift dramatically in the 24–48 hours before listing due to:
- Broader market sell-offs or rallies
- Negative news about the company or sector
- Grey market operator manipulation
- Sudden change in retail investor sentiment
For example, several SME IPOs in 2024–25 showed GMP of over 100% before listing but corrected sharply on listing day. Mainboard IPOs with GMP above 30% have a stronger (but still imperfect) track record of positive listing performance.
Kostak Rate vs Subject to Sauda
Two terms are common in grey market conversations. Kostak rate is the price at which someone buys the entire IPO application from you — so you get a fixed profit regardless of allotment. Subject to Sauda is a deal where you sell your application contingent on receiving allotment. Both are technically outside SEBI regulations.
GMP Accuracy on IPOpulse
IPOpulse tracks GMP at listing for every IPO and compares it to the actual listing price to calculate GMP accuracy. Our data for 2024–25 shows GMP was directionally accurate (i.e., positive GMP = positive listing gain) in roughly 72% of mainboard IPOs and around 60% of SME IPOs.