What Is the IPO Grey Market?

The grey market is an unofficial market where people buy and sell IPO shares before they are officially listed on the stock exchange.

Yes, you read that right — even before the IPO allotment is done, some investors and traders are already dealing in those shares!

This market is not regulated by SEBI or any official stock exchange — that’s why it’s called “grey.”

What Is GMP (Grey Market Premium)?

GMP stands for Grey Market Premium. It’s the amount people are willing to pay over the IPO price.

Let’s say a company is issuing its shares at ₹100, and the GMP is ₹50 — this means people in the grey market are ready to pay ₹150 for each share before it’s even listed.

It’s a way of guessing what the stock might list at — though it’s not always accurate.

How Does the Grey Market Work?

The grey market operates through offline networks — usually among small brokers, investors, and traders. There’s no official platform or app for it.

Here’s what happens:

• A person who applied for the IPO agrees to sell their shares (if allotted) at a fixed price (IPO price + GMP).

• The buyer takes on the risk — if the shares aren’t allotted or list lower, they might lose money.