The plain answer
Grey market premium (GMP) is an unofficial price quoted by traders for shares that have not listed yet. It is quoted per share, in rupees, and it lives outside the exchanges. No exchange supervises the quote and no clearing corporation sits behind it, so nobody who gives you a figure is obliged to trade with you. A quote of ₹45 on an issue with a ₹315 price band is a claim by some traders that the shares will list around ₹45 above the issue price.
The number works as a sentiment reading. It tells you what a small, informal group of traders is saying about demand for an issue before the shares trade anywhere. It cannot tell you what the listing price will be, because the listing price is set by the first real trades on listing day and nobody knows it before that morning.
The rest of this page covers the machinery: where the quote comes from, how to turn it into an implied price, what kostak and sauda mean, what pushes the number up and down, and why a figure that looked strong when the issue closed can be gone by the time the shares trade.
Where the grey market actually is
There is no building, no trading screen and no exchange for the grey market. The market is a network of traders, dealers and clients who take positions on IPO applications, and the quotes travel between them by phone calls, messaging groups and word of mouth.
Because the market has no venue, it also has no single price. Two dealers can quote different numbers for the same issue on the same afternoon, and both can be telling the truth about the deals in front of them. There is no tape to check, no last traded price and no depth. A quote carries no size either, so a ₹60 figure might describe one lot or a hundred, and you have no way to tell which.
What the market does have is people putting money behind a view. The two standard deals are kostak, which prices an application before allotment, and sauda, which prices the shares for delivery after listing. Both are private arrangements between two parties. Since neither runs through an exchange, neither carries the settlement guarantee an exchange trade does. If the other side fails to deliver, there is no exchange forum to complain to and no clearing corporation to fall back on.
How a GMP is quoted
The quote comes per share. A dealer saying 45 means ₹45 per share above the issue price, not ₹45 for the lot and not ₹45 in total. Applications are bought in lots, so the per-share figure is the only unit that travels.
From the per-share figure the market derives a percentage, by dividing it by the top of the price band. On a ₹300 to ₹315 band, a ₹45 quote works out to about 14%. The denominator matters here: the same ₹45 is 15% of the ₹300 floor and 14.3% of the ₹315 cap, so two people can describe one quote with two different percentages. The convention that has settled is the cap price, which is also what you pay if the issue prices at the top of the band.
Quotes can be negative. A discount quote says the grey market expects the shares to open below the issue price, and it is written and converted the same way, with a minus sign in front. A discount is no more of a fact than a premium is. Both are opinions held by a small group of traders, and both can be overtaken by events within days.
The figure is a snapshot rather than a feed. A quote can change during the bidding window, and plenty of issues never develop one at all, because the informal market only forms when enough people want to trade an application. Silence is a common answer, and it tells you the market has no view worth quoting.
The implied listing price, worked through
Take a GMP figure, add the issue price, and you have a notional listing price. That is the whole calculation. It runs on two numbers, and neither of them is a promise.
Say an issue has a ₹300 to ₹315 band, a lot of 100 shares and a grey market quote of ₹45. The table runs the arithmetic.
| Item | Value | How it is worked out |
|---|---|---|
| Price band | ₹300 to ₹315 | The range the issuer sets before the issue opens |
| Lot size | 100 shares | Applications run in whole lots |
| Grey market quote | ₹45 per share | The informal market figure on the day |
| Implied listing price | ₹360 | Top of the band plus the quote: ₹315 + ₹45 |
| Implied gain per share | ₹45 | The quote itself, for an applicant who pays the cap price |
| Implied gain on one lot | ₹4,500 | ₹45 × 100 shares, if the price holds |
| Quote as a percentage | About 14% | ₹45 ÷ ₹315, the top of the band |
| Block amount for one lot | ₹31,500 | 100 × ₹315, blocked in your bank under ASBA |
Read the last row first, because it is the only number that is real on the day you apply. Under ASBA your bank blocks the amount at the cap price and never transfers it until allotment, so the money keeps earning interest in your account. An application that does not get shares is simply unblocked. Everything above that row is a view about a price that does not exist yet.
The arithmetic also shows how easily a percentage misleads. If the issue prices at ₹305 rather than the cap, the implied listing price becomes ₹350 instead of ₹360, because the quote is added to what you actually pay. And the same ₹45 on a bigger issue is a far smaller claim: on a ₹2,000 price band it works out to a little over 2%. Compare the percentage across issues, never the rupee figure on its own.
Kostak and sauda, the deals behind a quote
Quotes do not float free. They are prices for two specific deals, and both names come from the informal market itself.
Kostak
Kostak is a fixed, non-refundable amount paid to the seller of an application to guarantee allotment, and it is paid whether or not that applicant ends up being allotted. The buyer is paying for the chance at the shares and the seller keeps the amount either way. Because nothing is refunded, the buyer carries the risk of ending up with no shares at all, and the amount is usually small next to the implied gain on the lot.
Sauda
Sauda is the amount paid on a promise to deliver shares after listing. A price is agreed while the issue is still open or before listing day, and the shares change hands once they exist in the seller's demat account. Everything rests on that promise. If the shares list far above the agreed price, the seller has a strong reason to reconsider, and the buyer has no clearing house to turn to.
Both are grey market terms, and both are unregulated. Neither has legal standing, and neither side carries an obligation that a regulator or an exchange will enforce. When you read a GMP figure, you are reading the price of one of these arrangements, because there is no share to trade yet.
What moves GMP up and down
GMP moves for the same reasons any price moves, with one difference: the market is thin, so a handful of deals set the number. A short list covers most of what shifts it.
- Subscription momentum. Demand in the institutional category on the final day of bidding pulls quotes up, and a quiet book pushes them down. The exchanges publish these figures all through the window, so you can watch the same evidence the grey market watches.
- The pricing of the issue. An aggressively priced issue leaves less room between the offer price and a sensible listing price, and the quote tends to be thinner. A conservative band does the opposite.
- Anchor allocations. Anchor investors are allotted a day before the issue opens, and a strong anchor list reads as a demand signal before a single retail application exists.
- The market backdrop. A falling index drags quotes down across every issue open in that week, and a strong listing from a recent issue lifts the next few.
- The size of the issue against expected demand. A small issue in a hot sector attracts more application buying than a large one in a quiet sector.
- How many people are trading the application. The thinner the informal market, the more a single deal moves the quote.
Notice what is missing from that list: anything about the company's accounts. The grey market does not run on the offer document. It runs on the flow of applications and on what traders expect other traders to pay, which explains why a quote can swing hard in a week when nothing about the business has changed.
The life of a quote, and why it rarely survives
- A dealer quotes a premium before bidding opens
- The quote moves each day the issue stays open
- It often peaks as the issue closes
- Then it holds, drifts lower, or turns into a discount
- Listing day arrives and real trades set the price
- The grey market quote stops existing
A figure usually appears before the issue opens, when traders start quoting on expectations and anchor allocations. It moves each day the book is open, and it often peaks near the close, when the final subscription numbers are in and the mood of the market is clearest. Then the issue closes, and for a day or two there is nothing new to trade on.
What happens in that gap decides the outcome. Some quotes hold their level until listing. Others drift. Others reverse into a discount before the shares ever trade, which means the grey market has changed its mind about an issue while no share changed hands. GMP has run far above the eventual listing price on some issues, and on others it has reversed to a discount before listing day arrived. Nothing in the quote tells you which of those you are looking at while the number is high.
Who is doing the quoting matters too. People holding applications have an interest in the figure looking strong, because a rising quote makes the application they are trying to sell worth more. That is not a conspiracy, it is a market with a direction, and it is one more reason the number deserves less weight than a published subscription figure.
Then the market ends. Once the shares list and trade on the exchange, the grey market for that issue stops existing. There is no closing quote, no final settlement and no record to check the earlier promises against. The premium does not reconcile with the listing price, it simply stops being something anyone quotes.
GMP against the numbers that are published
The contrast at the centre of this page is between two kinds of number. Subscription figures are real and published by the exchanges: every bid is counted, the categories are separated, and the figures refresh through the bidding window. A grey market premium is published by nobody. It exists because traders repeat it to each other.
The table sets the two side by side.
| Point of comparison | Subscription figures | Grey market premium |
|---|---|---|
| Who publishes it | NSE and BSE, on their issue pages | No one. It passes between informal traders |
| Regulated by SEBI | Yes, as part of the issue process | No. It sits outside the regulatory framework |
| What it measures | Bids received against the shares on offer | What a small group of traders will pay for an application |
| Unit | Times subscribed, such as 12.4 times | Rupees per share, such as ₹45 |
| When it updates | Through the bidding window | No schedule, and it may not exist at all |
| After listing | It stays in the published record | It disappears |
| What it tells you | Real demand for the shares on offer | Sentiment in an unregulated market |
The subscription figure has an audit trail. It comes off the exchange bidding platform, the same number appears on both exchanges, and the category break-up shows you where the demand sits. A GMP quote has no trail at all. You cannot check who said it, what size sat behind it, or whether the deals it describes ever happened.
That difference decides how you can use each number. A retail subscription figure of 12 times tells you how many applicants are chasing the same shares as you, which is a real input into your expectations about allotment odds. A GMP figure gives you a mood. You cannot compute with it, and you cannot check it afterwards.
How people misuse a GMP figure
Most of the harm comes from one habit: treating the quote as the reason to apply. These are the versions of that mistake that come up again and again.
- Applying because the premium looks large. The size of the quote says nothing about whether the shares are worth the issue price. It measures what other applicants will pay for an application, not what the business is worth.
- Applying for more lots to match the quote. In an oversubscribed retail category the allotment runs as a lottery, so extra lots scale the prize rather than the odds. The retail category caps at ₹2,00,000, and the block sits at the cap price until T+2.
- Reading the implied price as a prediction. GMP plus the issue price is arithmetic on an opinion. It is not a forecast of the listing price.
- Selling an application through kostak. The kostak amount is non-refundable and the arrangement is unregulated, so a market risk turns into a counterparty risk instead of going away.
- Treating a discount as a verdict on the business. A negative quote mostly reflects the pricing of the issue and the mood of that week in a market thin enough for a few deals to set the level.
- Ending up with shares you never wanted. A high quote pulls people into applying for a business they have not read about, and the shares arrive in the demat account whether listing day goes well or badly.
There is a quieter misuse too: repeating the number as if it were a fact. A premium of 60 sounds like a measurement. It is one dealer's price for one kind of deal, repeated until it sounds like a market. The difference matters once the number starts driving decisions about real money.
What to do with GMP as an applicant
Treat the quote as sentiment, and never as a reason to apply. That is the short answer. The practical version is a set of habits that put the real numbers in front of the unofficial one.
- Form your own view of the price first. Read the offer document, including the objects of the issue, and decide whether the business is worth the asking price. If you would not want to own it at the cap price, a premium quote does not change that.
- Use the numbers that exist. Subscription figures on the NSE and BSE issue pages are published, updated through the window and broken out by category. They are the demand evidence you can actually check.
- Count the money properly. One lot at the cap price is the block, and it stays blocked until T+2 under the reduced timeline. Brokerage on an IPO application is ₹0, the retail category caps at ₹2,00,000, and a UPI mandate runs up to ₹5 lakh per application.
- Apply once, with matching details. One application per PAN per investor category, with the PAN in the application matching your bank and demat records, and the UPI mandate approved before the issue closes.
- Know when the clock starts if you are allotted. Shares credit on T+2 and trade from T+3, and the holding period for tax runs from allotment rather than from the day you sell.
If you still want to watch the quote, watch its direction rather than its level. A figure that drifts lower across the bidding window is saying something about demand, and a figure that holds after the issue closes is saying something else. Neither is a promise about listing day, and both are more useful as a trend than as a number.
DematOpen's own grey market tracker carries the quoted premium beside the subscription figures, and the page labels it for what it is: unofficial, unregulated, and refreshed on a 30-minute cycle rather than streamed live. Read it next to the exchange pages rather than instead of them.
What people usually get wrong
The GMP is the expected listing price
Adding the quote to the issue price gives a notional listing price, and the quote is an opinion held by a small group of traders. The real listing price is discovered by the first trades on listing day.
A high GMP means the issue will list higher
GMP has run far above the eventual listing price on some issues and reversed to a discount before listing on others. It reads sentiment, and sentiment is not an outcome.
The grey market is regulated like the exchange
It is not regulated by SEBI or by any exchange. Kostak and sauda are private arrangements with no settlement guarantee and no obligation on either side to actually trade.
Someone publishes the GMP, so it can be checked
Nobody publishes it. Quotes pass between traders, differ from dealer to dealer and can change within hours. Only subscription figures are published, and those come from the exchanges.
A negative GMP means the company is weak
A discount quote reflects the pricing of the issue and the mood of that week in a thin market. It is a reading of demand for the application, not a verdict on the business.
I can lock in the GMP gain before listing
A kostak amount is non-refundable whether or not you are allotted, and a sauda depends on the other side delivering once the shares exist. Neither arrangement is enforceable through an exchange.
Questions people ask
Nobody regulates the quote and it has no legal standing. The grey market is not supervised by SEBI or by any exchange, the deals inside it are private arrangements between two parties, and neither side carries an obligation that a regulator or an exchange will enforce. A GMP figure gives you no claim on a share, and no one has to honour it.
No single person or body does. The figure is whatever traders in the informal market are quoting for applications and for delivery after listing, so it differs from dealer to dealer. With no central venue there is no official price, no last traded level, and no record of the deals behind the number.
No. GMP has run far above the eventual listing price on some issues, and on others it has reversed to a discount before listing day. The listing price is discovered by real orders in the exchange session on listing morning, and nothing published before that day fixes it.
Not on an exchange, because there is no listed security to trade yet. The grey market versions of that deal are kostak, where a fixed non-refundable amount buys an application, and sauda, where a price is agreed for delivery after listing. Both rest on the other side keeping a promise, with no clearing corporation standing behind it.
It means the traders quoting expect the shares to open below the issue price, so the implied listing price sits under what you would pay. A discount is a sentiment reading from the same thin market that produces a premium, and it is just as capable of being wrong.
Once the shares list and trade. From that morning there is a real exchange price, so a quote about a notional price has nothing left to describe. The premium does not settle or reconcile with the listing price, it simply stops existing, which is why nobody can be held to it afterwards.
Where to go next
A grey market premium is a number about an issue. The application mechanics, the block, the timeline and the tax clock are the parts that decide what happens to your money.
Sources
- Securities and Exchange Board of India. Circular SEBI/HO/CFD/TPD1/CIR/P/2023/140 dated 9 August 2023, which cut the public issue timeline to T+3 for issues opening on or after 1 December 2023. Accessed 14 September 2026.
- National Stock Exchange of India. IPO and public issue pages, where subscription figures are published through the bidding window. Accessed 14 September 2026.
- BSE Limited. Public issues and IPO pages, where the same subscription figures are published. Accessed 14 September 2026.
- Securities and Exchange Board of India. Investor education and cautions on unregulated markets and schemes. Accessed 14 September 2026.