The Functions of the New IPO GMP
                     The Functions of the New IPO GMP
IPO  Grey market premium, or GMP, is the amount that a company's initial public offering 
(IPO) is selling for in the grey market.  Before investing in the stock market, a company's 
shares begin trading in the grey market, or unofficial market, whenever it launches its initial 
public offering (IPO). The price at which shares from initial public offerings (IPOs) are sold in 
this gray market is known as the gray Market Premium (GMP).  GMP is used to estimate the 
listing price at the time of the company's initial public offering (IPO) on the stock exchange.  
For an investor thinking about investing in a new initial public offering New IPO GMP may be
a key metric.  However, because market conditions can change at the time of listing, it is not 
totally reliable.
GMP is a standard estimate of what the face token price of the stock may be when it lists on 
the stock exchange (NSE/BSE).
How does IPO GMP work?
Original and Old: If an IPO has a lot of sales, its GMP increases.
If there is not much value in the New IPO GMP than  may be low or undervalued.
Dungeon Solution:If the issue price of an IPO is ₹100 and its GMP is running at ₹50, then 
it means that in the grey market people are ready to sell this stock at ₹150 (₹100 + ₹50).
If there is a GMP label (eg - ₹10), then it means that the issue may be open at the lowest 
price on the stock store.
Grey market deals: Privatisation takes place: These deals are not done on the basis of 
stock valuation but are done in an unofficial manner between brokers or investors.
If GMP is high: May cause damage to the installation of IPO.
If GMP is low or skewed: May cause damage to the installation.
Not 100% reliable: Sometimes GMP can be bad even if it is high, and sometimes shares 
can do well even without GMP.
Advantages of New IPO GMP
Estimation of listing gains: GMP helps in understanding whether the stock will open at a 
premium on listing.
Idea of market sentiment: If the GMP is good, it indicates that the demand for the IPO is 
high in the market.
Helps in IPO investment decision: It can help investors to gauge whether they should 
invest in this IPO or not.
Disadvantages of IPO GMP
 Not 100% accurate: GMP only reflects the grey market situation, but market conditions can
change.
 Not regulated by SEBI: The grey market is unofficial, so there is no legal protection to 
invest in it.
Can be artificially inflated: Sometimes GMP is also manipulated to increase it.
Conclusion 
Investment decisions should always be made by considering the company's financial 
statements, business model, and growth prospects. GMP operates on new initial public 
offerings New IPO GMP and is merely an indicator that allows investors to anticipate the 
price by conducting their study beforehand.  It can be dangerous to base investments on 
GMP.