By ipomarket.in Editorial Team · Last reviewed: 2026-10-19
Disclaimer: This article is for informational purposes only and does not constitute investment advice. IPO investments are subject to market risks. Please read the offer document carefully and consult a SEBI-registered investment advisor before investing.
Ask most retail IPO investors how an issue will list, and they will quote one number: the Grey Market Premium, or GMP. It is the single most-watched figure in the days before a company debuts on the exchanges. But a close look at 2025's listings shows the gap between what GMP implies and what actually happens on listing day is wider than many assume.
This article walks through what GMP is, what the data says about its reliability, and how to read it without treating it as a forecast.
What GMP actually is
GMP is the unofficial premium at which IPO shares change hands in the informal grey market before a company officially lists on the NSE or BSE. If an IPO is priced at ₹100 and the GMP is ₹30, grey-market dealers are informally pricing the stock at around ₹130 ahead of listing.
The important caveat: this market operates entirely outside SEBI's regulatory framework. It is not recognised or endorsed by the NSE, the BSE, or SEBI. There is no exchange, no clearing, and no published order book. GMP numbers circulate through dealer networks and aggregator sites, which is why the same IPO can show different premiums on different platforms.
If you are new to the mechanics, our explainer on what IPO GMP is and how it works covers the basics before you read further.
The 2025 reality check
Here is where the data gets uncomfortable for GMP believers. According to a Business Standard analysis, in 2025 some 55 of 101 mainboard IPOs listed below their grey market price. In other words, for more than half of last year's mainboard debuts, the grey market overstated where the stock would actually open.
That is not a rounding error. It means GMP, as a directional predictor of listing-day gains, got it wrong the majority of the time in 2025. The same analysis describes GMP as unregulated, sentiment-driven, and lacking the transparency you would want from any serious predictor of post-listing performance.
A specific example that is often cited: the SBI Funds Management IPO reportedly carried a GMP of around 16-18% in July 2025 but listed at only a 6.85% gain. If an investor had sized up their expectations purely on the grey market signal, the actual outcome would have fallen well short.
GMP can also understate — not just overstate
To be fair to GMP, the error runs in both directions, and sometimes dramatically in the investor's favour.
In November 2023, Tata Technologies was priced at ₹500 with a GMP of around ₹475, which would imply a listing near ₹975. It reportedly listed close to ₹1,200, a gain of roughly 140% — far above what the grey market had signalled. Similarly, Vibhor Steel Tubes in early 2024 reportedly listed with a variance of nearly 59% above what its latest GMP implied.
These are reported figures from a single source rather than confirmed exchange data, so treat them as illustrative rather than precise. But the pattern is real: GMP can lag a genuine demand surge just as easily as it can get carried away by hype.
So is GMP useless? Not quite
Here is the nuance that gets lost in the "GMP is just noise" versus "GMP is gospel" debate.
One analysis of around 300 Indian IPOs (from 2019 onward) reportedly found the correlation between GMP and listing-day returns to be close to 0.8 — a strong statistical relationship on paper. Taken together with the 2025 miss rate, this points to a specific conclusion rather than a contradiction: GMP is reasonably good at indicating direction and rough magnitude across a large sample, but unreliable for predicting the exact outcome of any single IPO.
That 0.8 figure is a reported statistic from one blog's study, not a peer-reviewed or exchange-published number, so it should be read with caution. It does not tell you which of the next ten IPOs will beat or miss their GMP.
How to read GMP without getting burned
If you track GMP, treat it as one sentiment input among several, not as a price target.
- Direction, not precision. A strongly positive GMP suggests healthy demand; a flat or negative GMP suggests weak interest. The exact premium is far less dependable than the sign.
- Cross-check with fundamentals. GMP tells you nothing about valuation, debt, growth, or management quality. Our guide to analysing IPO financials from the RHP is a better foundation for a holding decision.
- Watch subscription data too. Real demand from QIBs, NIIs, and retail investors shows up in the subscription numbers, which are published and verifiable, unlike GMP.
- Remember it can flip overnight. Because it is sentiment-driven and unregulated, GMP can swing sharply in the final days before listing.
The honest summary: GMP is a crowd-mood thermometer, not a forecast. In 2025, that thermometer ran hot more often than the market delivered.
FAQ
What is GMP in an IPO?
GMP, or Grey Market Premium, is the unofficial premium at which IPO shares trade in the informal grey market before the company officially lists on the NSE or BSE. It reflects demand sentiment but operates entirely outside SEBI's regulatory framework and is not endorsed by the exchanges or the regulator.
How reliable was GMP in 2025?
Not very, as a precise predictor. In 2025, 55 of 101 mainboard IPOs listed below their grey market price, meaning the grey market overstated the listing outcome more than half the time, according to a Business Standard analysis.
If GMP is unreliable, why do people still track it?
Across a large sample of around 300 IPOs from 2019 onward, one study reportedly found a correlation of close to 0.8 between GMP and listing-day returns, suggesting it captures broad direction and demand. The problem is single-IPO accuracy: it can badly overstate gains (SBI Funds Management reportedly had a 16-18% GMP but listed up 6.85%) or understate them (Tata Technologies reportedly listed up around 140%).
Can GMP tell me whether an IPO is a good long-term investment?
No. GMP is a short-term sentiment signal about listing day only. It says nothing about valuation, financial health, or business quality. For a longer view, read the offer document and assess fundamentals rather than relying on grey-market chatter.
Is trading in the grey market legal?
The grey market operates outside SEBI's regulatory framework and is not recognised by the NSE, BSE, or SEBI. There is no official exchange, oversight, or investor protection, so retail investors should treat any grey-market activity with caution.
Last reviewed: 2026-10-19 · This is a draft for editorial review.