By ipomarket.in Editorial Team · Last reviewed: 2026-10-22
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.
Grey market premium, or GMP, is probably the first number most retail investors check before an IPO lists. It circulates on WhatsApp groups, forums and tracking websites, and it carries an aura of insider knowledge. But how accurate is it, really? The honest answer is that nobody can tell you precisely, because GMP is unregulated and the studies that try to measure its accuracy reach different conclusions depending on their method and sample.
This article pulls together what various trackers and analyses report, so you can judge GMP for what it is rather than what it pretends to be.
What GMP actually is
GMP is the unofficial premium at which IPO shares change hands in the grey market before they are listed on the exchanges. It is completely unregulated, with no official data source and no oversight from SEBI or the exchanges, according to industry explainers. The figures come from informal dealer networks, social media groups and broker channels rather than from any regulated venue.
That matters because it means there is no single "correct" GMP. Two websites can quote different numbers for the same IPO on the same day. If you want a fuller primer, see our guide on what IPO GMP is and how it works.
Direction versus magnitude
The most useful way to think about GMP accuracy is to split it in two: does it point the right way (direction), and does it get the size of the move right (magnitude)?
On direction, the reported numbers are reasonably encouraging but far from perfect:
- Studies of Indian IPO data reportedly show roughly 60-70% directional accuracy for large-cap IPOs.
- A 2026 IPO data analysis reportedly found GMP predicts listing direction correctly 60-73% of the time when a clear signal exists.
- One tracker claims GMP called direction right 82.5% of the time across 280 past IPOs, with accuracy audits it says are updated after every listing.
- PaisaTools data on 35 recent listings reportedly shows 74% directional accuracy.
So the broad picture, across sources, is that GMP gets the up-or-down call right somewhere in the region of six to eight times out of ten. Keep in mind these are self-reported figures from trackers and analyses, each using a different sample and definition, so treat the exact percentages with caution.
Magnitude is where GMP struggles much more:
- IPO Central's analysis of 86 IPOs reportedly found that the majority had a variance of around 25% between the GMP-led indicative price and the actual listing price.
- IPOGram's tracking data reportedly shows an average GMP error of ₹25, meaning the actual listing price was typically ₹25 away from what GMP implied.
- PaisaTools reportedly found a ±12.5 percentage point average gap between GMP-implied and actual listing gain.
- Even the tracker claiming 82.5% directional accuracy reportedly landed within 5 percentage points of the actual open on only 39.3% of cases.
Put plainly: GMP may tell you the stock is likely to rise, but the actual gain can be very different from what the premium suggested.
The optimism bias
There is a consistent thread in the data that GMP tends to run hot. One 2026 analysis reportedly found GMP implying an average listing gain of 11%, while actual average gains came in around 6%. Using those two figures, that is roughly a five percentage point overestimate (11% implied minus 6% actual). If that pattern holds, treating the GMP-implied gain as a ceiling rather than an expectation would be the more realistic reading.
When GMP is more reliable
GMP is not uniformly useless. The reported evidence suggests it behaves better in specific conditions:
- It is more accurate for heavily oversubscribed IPOs with strong institutional participation, according to tracker commentary.
- GMP set during the subscription window is often unreliable, while GMP closer to listing day tends to reflect more complete information.
The catch is that GMP is also highly volatile and can shift dramatically within 48 hours before listing, so the "more reliable" late-stage number is also a moving target. For a practical framing of how to use the premium without being misled by it, see our note on GMP safety for retail investors.
Where GMP breaks down
Two failure modes deserve attention.
First, manipulation. GMP can reportedly be exaggerated by market operators, particularly in SME IPOs, where the narrative is that operators set premiums before broadcasting them to retail groups. Because there is no audit trail, an inflated GMP is hard to challenge.
Second, sudden collapse. The Lenskart IPO is a frequently cited example: its GMP reportedly hit around ₹120 in late 2025 before dropping to zero ahead of listing, and the stock opened at a 1.7-3% discount. A premium that evaporates in days is a reminder that GMP is sentiment, not a guarantee.
The gap can also run the other way. Vibhor Steel Tubes reportedly had a variance of nearly 59% from its latest GMP, showing how far actual market enthusiasm can diverge from what the grey market expected.
How to read GMP sensibly
None of this means GMP is worthless. It is a sentiment indicator with a decent directional hit rate and a poor magnitude record. The reasonable way to treat it is as one input among several, alongside subscription data, financials and the offer document, rather than as a forecast of your listing-day profit. Reading the DRHP will tell you far more about business quality than any grey market number.
FAQ
How accurate is IPO GMP at predicting listing direction?
Reported figures vary by source. Studies reportedly show roughly 60-70% directional accuracy for large-cap IPOs, a 2026 analysis puts it at 60-73% when a clear signal exists, PaisaTools reports 74%, and one tracker claims 82.5% across 280 IPOs. These are self-reported and use different samples, so treat them as indicative, not definitive.
Does GMP predict the size of listing gains accurately?
Usually not. IPO Central reportedly found a majority of 86 IPOs had around 25% variance between GMP-implied and actual listing price, IPOGram reports an average error of ₹25, and PaisaTools reports a ±12.5 percentage point gap. One analysis found GMP implied 11% gains against about 6% actual, an overestimate of roughly five percentage points.
Can GMP be manipulated?
Reportedly yes, especially in SME IPOs, where operators are said to set and broadcast inflated premiums. Because GMP is unregulated with no official source, such figures are difficult to verify or challenge.
When is GMP most reliable?
It is reportedly more dependable for heavily oversubscribed IPOs with strong institutional participation, and closer to listing day when it reflects more complete information. Early GMP during the subscription window is often unreliable, and the number can shift dramatically within 48 hours of listing.
Should I rely on GMP to decide on an IPO?
GMP is a sentiment signal, not a forecast. The Lenskart example, where GMP reportedly fell from around ₹120 to zero before a discounted listing, shows how quickly it can reverse. Use it alongside the offer document, financials and subscription data rather than on its own.
Last reviewed: 2026-10-22