Grey Market Premium (GMP) is the difference between the IPO issue price and the price at which the IPO shares are traded unofficially in the grey market.
For example, the IPO price disclosed in the RHP or IPO advertisement is Rs. 300 to Rs. 325. Most probably the IPO is expected to oversubscribe and Rs. 325 should be the final price. You can check the IPO subscription status on the NSE stock exchange website after 5:00.
Before the IPO is open, a certain closed group of investors is willing to buy & sell shares at Rs. 500.
So the GMP will be Rs. 500 – Rs. 325 = Rs. 175.
This Rs. 175 is the premium (GMP) over the expected issue price of Rs. 325.
Yes, the trading happens unofficially before the shares list on the stock exchange. The grey market operates outside the regulatory purview and involves speculative trading.
Is GMP Accurate?
The Grey Market Premium (GMP) is not an official or regulated market. It is an unofficial market where IPO shares are traded before their listing on the stock exchange.
You may not find its accuracy as such. The GMP is purely based on speculative buying and selling of IPO shares. GMP does not necessarily reflect the actual listing price or performance of the IPO when it starts trading on the exchange.
GMP is driven by market sentiment and demand among investors who want to buy shares before the official listing.
You can expect GMP to be highly volatile and subject to rapid changes. The accuracy of GMP depends on the information available to market participants at that particular time.
Note – You need to exercise caution if you are trying to use GMP to make investment decisions because of the above reasons.
At the most, you can check for GMP information on various financial news websites or from reputable sources.
How to Check Grey Market Premium
You can refer to financial news websites or brokerage houses or trusted finance blogs that have access to real-time market information.
You need to keep in mind that participating in the grey market carries risks, and it’s essential to thoroughly research any investment decisions.
A few sources commonly used by investors to check the Grey Market Premium (GMP) for IPOs in India are
#1. Check GMP on Economic Times
The Economic Times is a reputable financial newspaper in India. Their website offers IPO coverage, including GMP updates.
For example, you can check here the GMP of the recent IPO of NetWeb Technologies.
#2. Livemint
Livemint is another trusted financial news source in India that covers IPOs and stock market updates, including the GMP.
#3. Business Standard
Business Standard is one of India’s leading financial news websites. They provide real-time updates on the stock market, including IPO details and GMP.
#4. 5Paisa
5Paisa is one of the top three discount brokers in India. They have a separate page for information about IPO-related information, including IPO details and GMP.
You can check the GMP of various open IPO on 5Paisa.
#5. Check GMP on Other Websites & Blogs
Here are a few websites & blogs to find GMP.
- TopShare Brokers.com
- IPOWatch.in
- IPOWala.in
- ShareMarketExpress.com
How Reliable is GMP Information Available Online
The reliability of GMP information available online on the websites of stockbrokers, financial websites, and blogs can vary.
Below are some factors that you need to consider when looking for the reliability of GMP information online.
#1. Official vs. Unofficial Sources
Official financial news websites, reputable stock brokers, and well-known financial blogs are generally more reliable sources of GMP when compared to lesser-known websites.
#2. Real-time Updates
Check if the GMP information is regularly updated. GMP can change rapidly, so it’s crucial to have access to the most recent data.
#3. Consistency
You need to cross-reference the GMP information from multiple sources just to check for consistency.
Be cautious if there is a wide variation in GMP prices and verify with additional sources.
#4. Reputation
Consider the reputation of the website or platform providing the GMP information. Well-established financial websites and brokerages are more likely to have a reputation for providing accurate data.
#5. User Reviews
If available, you can look for user reviews or comments about the website’s accuracy in reporting GMP.
But you need to be cautious as online reviews can sometimes be misleading or biased.
Finally, remember that GMP is an unofficial market and highly speculative. GMP may not accurately reflect the actual listing price or performance of an IPO.
You need to use GMP as a reference point only. Restraint from using GMP as the sole basis for investment decisions.
You may like to read – how to apply for IPO in Zerodha
Final Thoughts
You need to exercise caution while taking GMP into consideration. Verify data from multiple reputable sources before making any investment decisions.
Overall, relying solely on GMP can be risky, and it is essential that you conduct thorough research and seek advice from qualified financial professionals if needed before investing in any IPO.a
FAQs
GMP is essential for IPO investors as it provides an unofficial estimate of the potential listing price and early market sentiment. You can use this information to gauge the market’s perception of the IPO’s value and potential demand.
You can find the latest Grey Market Premium for an IPO on financial news websites, brokerage platforms, and dedicated IPO tracking websites. These sources often provide real-time updates on GMP for upcoming IPOs.
Reputable financial news websites, established brokerage platforms, and IPO-focused websites are generally considered reliable sources for GMP information.
The Grey Market Premium can change frequently, sometimes multiple times within a day. It is highly influenced by market sentiment and demand, and any news or information related to the IPO can cause rapid fluctuations in GMP.
No, the Grey Market Premium is an unofficial market, and it is not regulated by SEBI or any other financial authority. It operates outside the purview of regulatory bodies.
While GMP can provide an estimate of the potential listing price, it may not always accurately predict the IPO’s actual listing price.
The final listing price is determined by the company and the underwriters based on various factors.
GMP is not a reliable indicator of an IPO’s future performance on the stock exchange. It only reflects market sentiment before listing and does not consider the company’s fundamentals or other market factors that influence long-term performance.
Investors should interpret GMP as an informal sentiment indicator and not a concrete prediction.
A high GMP may indicate strong demand, but it also carries higher risks, while a low GMP might indicate weaker demand but doesn’t necessarily mean poor long-term performance.
No, GMP should not be the sole basis for making investment decisions in an IPO.
You need to conduct thorough research on the company’s fundamentals, financials, and industry trends.
GMP is speculative and may not accurately predict the IPO’s actual performance on the stock market.
