What is GMP and how reliable is it for IPO decisions?

Grey Market Premium (GMP) is the premium at which IPO shares change hands unofficially before listing. How it works: dealers in the grey market quote a premium over the issue price based on demand. A GMP of Rs 100 on a Rs 500 issue implies an expected listing price near Rs 600. Reliability: GMP often tracks final listing direction but the magnitude can swing widely with market mood. It is not regulated, has no settlement guarantee, and can be manipulated in low-float SME issues. Bottom line: treat GMP as one sentiment input alongside fundamentals, valuations and subscription data - never as the sole reason to apply.