As of the morning of 8 September 2026, 12 of 22 mainboard and SME IPOs being tracked by primary market data providers carried a recorded grey market premium, the highest belonging to Kanohar Electricals at roughly plus 31 percent over its price band. With close to 25 companies expected to launch IPOs worth an estimated Rs 45,000 crore this month alone, ahead of a SEBI approval deadline on 30 September, grey market premium, commonly shortened to GMP, has once again become one of the most searched terms among Indian IPO investors.
It is also one of the most misunderstood. GMP is quoted with precision, updated every few minutes on tracking websites, and often treated as a preview of an IPO's listing price. None of that makes it official, regulated, or particularly reliable on its own.
What GMP actually is
Grey Market Premium is the unofficial, additional amount buyers are willing to pay over an IPO's issue price, in an informal, over-the-counter market that operates before shares are allotted or listed on the NSE or BSE. If an IPO is priced at Rs 200 and its GMP is quoted at Rs 40, grey market participants are informally willing to pay Rs 240 for that share, implying an expected listing gain of about 20 percent.
Two related terms are quoted alongside GMP. The Kostak rate is the price at which an investor can sell their entire IPO application to another party for a fixed amount, paid regardless of whether the application is eventually allotted shares. The Subject to Sauda rate is a similar transaction, but the payment is conditional on allotment actually happening. All three, GMP, Kostak, and Subject to Sauda, are quoted in rupee terms and used as sentiment indicators ahead of a listing.
Why it sits entirely outside regulation
The grey market has no electronic order book, no central clearing house, and no oversight from SEBI, NSE, or BSE. Transactions are arranged informally, historically through personal networks and phone calls concentrated in cities including Mumbai, Ahmedabad, Surat, and Rajkot, and increasingly over messaging platforms. Deals rest entirely on trust between the two parties involved.
That has direct, practical consequences for anyone paying attention to a GMP quote. There is no legal recourse if a counterparty fails to honor a Kostak or Subject to Sauda deal. There is no single, verifiable source for a given day's GMP, which is why quotes for the same IPO can vary slightly between tracking platforms. And because the market operates informally, GMP data reflects the sentiment and liquidity of a relatively small, self-selected group of grey market participants, not the full base of investors who will eventually buy and sell the stock on listing day.
A case study in how wrong GMP can be
The clearest recent illustration is Hyundai Motor India's IPO in October 2024, at the time the largest public offering in Indian history at close to Rs 27,860 crore. Its GMP swung sharply in the weeks before listing, and the final outcome diverged from where the grey market had priced it just a day earlier.
Even on the eve of listing, with a GMP implying a premium of roughly Rs 75 and a price near Rs 2,035, the stock went on to list at a discount of around 1.3 to 1.5 percent on both exchanges. Analysts at the time had already flagged weak retail and institutional subscription, along with valuation concerns, as reasons the muted GMP readings in the days before listing were themselves a warning sign, even before the final outcome was known. The episode is frequently cited in the Indian market commentary precisely because it shows GMP moving by more than Rs 100 per share within two weeks, in both directions, right up to the point of listing.
