What is IPO GMP?
Understand Grey Market Premium — what it means, how to read it, and how to use it wisely when evaluating IPOs.
📈 GMP = Grey Market Premium
GMP is the unofficial premium at which IPO shares are traded in the grey market— an unofficial, unregulated market that operates between the IPO subscription period and the official listing date. It indicates the market's expectation of where the stock will list on the stock exchange.
How Does GMP Work?
Before the IPO Lists
Once an IPO subscription opens, grey market participants begin buying and selling IPO application forms and allotments among themselves at a premium or discount to the issue price.
How the Premium is Calculated
If an IPO has an issue price of ₹200 and the GMP is ₹40, the expected listing price is ₹240. The GMP percentage is (₹40 ÷ ₹200) × 100 = 20%.
GMP Changes Daily
GMP fluctuates based on subscription demand, market conditions, global cues, and sector news. It is not fixed and can swing significantly close to listing.
Not Legally Binding
GMP is entirely informal. The actual listing price is determined by demand and supply on the stock exchange on listing day and may differ significantly from GMP.
How to Read GMP Levels
Above 30%
Strong investor demand; listing gain likely. High allotment competition.
10% – 30%
Positive market sentiment. Moderate listing gains expected.
0% – 10%
Weak demand or fair pricing. Listing gain may be minimal.
Negative
Shares trading below issue price in grey market. Listing loss risk.
Live GMP Example
| IPO Name | Issue Price | GMP | Expected Listing | Premium % |
|---|---|---|---|---|
| Tata Capital IPO | ₹345 | ₹42 | ₹387 | +12.2% |
| LG Electronics IPO | ₹1,140 | ₹85 | ₹1,225 | +7.5% |
| PhysicsWallah IPO | ₹109 | ₹18 | ₹127 | +16.5% |
What is Kostak Rate?
Kostak is the price at which an entire IPO application is traded in the grey market — regardless of allotment outcome. For example, if the kostak rate is ₹500, it means the buyer will pay ₹500 for your application even if you are not allotted. This is different from GMP, which is the premium per share.
Frequently Asked Questions
Is GMP an official or regulated market?
No. GMP operates in the grey market — it is completely unofficial and unregulated by SEBI. Trading in the grey market is not legally recognised.
How reliable is GMP for predicting listing price?
GMP has a moderate correlation with actual listing prices but is not a guarantee. It can change rapidly in the days before listing based on broader market conditions.
Where can I check IPO GMP?
IPOMaster tracks live GMP for all active IPOs. You can also find GMP data on sites like InvestorGain, IPOWatch, and Chittorgarh.
Can GMP go negative?
Yes. A negative GMP (also called 'kostak at discount') means grey market participants expect the IPO to list below its issue price.
Should I decide whether to apply based on GMP alone?
No. GMP should be one data point among many — company fundamentals, valuation, business model, and sector outlook are far more important for long-term investing.
Track Live GMP for All IPOs
IPOMaster updates GMP data in real time for all active and upcoming IPOs.
View Live GMP Tracker →