Two Initial Public Offerings (IPOs, when a company first sells its shares to the public) were listed on the same Tuesday this month. One closed the day up 35%. The other got stuck at its lower circuit, down nearly 7%. Same day. Same exchange segment. Same grey market number everyone had been refreshing all week.
If that leaves you unsure whether that number is something to trust or something to ignore, I would call you a "Wanderer." You are not confused because you did something wrong. You are confused because everyone talks about this one number as if it always gets things right, when really, it is just a guess, and guesses can go either way, sometimes in the very same week.
So, dear Wanderer, here at The Bazaar Guru, let's break it down together: what this number actually is, how it gets decided behind the scenes, why every IPO season turns into a refresh-this-number frenzy, what really happened with these two listings, and what you should be checking instead.
In This Post:
What Is GMP In Plain Words?
How Is That GMP Number Actually Set?
Why Retail India Cannot Stop Checking It
Two IPOs, Same Listing Day, Two Different Stories
Why GMP Gets It Wrong More Than People Admit
What Else You Should Look At
Common Mistakes to Avoid
FAQ
Key Takeaways
Go Deeper
Disclaimer
What Is GMP, In Plain Words?
GMP stands for Grey Market Premium. It is simply the extra amount some traders are willing to pay for IPO shares before those shares list on a stock exchange such as the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE).
Say an IPO is priced at ₹150 a share. If the GMP is ₹30, it means some traders in an unofficial market expect the share to open around ₹180 once it lists. That is a guess dressed up as a number.
The word "grey" is the important part. This market has no oversight from the Securities and Exchange Board of India (SEBI, the government body that regulates India's stock markets), no exchange, and no official record of trades. It is a loose network of dealers quoting prices to each other over calls and messages. Think of it as an informal opinion poll, not a rulebook.
How Is That GMP Number Actually Set?
The single GMP figure you see on a tracking website is not pulled out of thin air. It comes from real, informal deals happening in the background, mainly two kinds: a Kostak Rate deal and a Subject to Sauda deal. Understanding these makes it much easier to see why the number can be so shaky.
A Kostak Rate deal is when someone who has already applied for an IPO sells their entire application to a dealer for a fixed, agreed amount, before allotment (the process of deciding who actually gets shares) has even happened. Say a person applied for shares worth ₹2,00,000 in the IPO of a fictional company, "XYZ Limited," and a dealer agrees to a Kostak Rate of ₹2,000. The seller pockets that ₹2,000 no matter what happens next. Even if the applicant is not allotted a single share of XYZ Limited, the buyer still has to pay the agreed amount, because the deal was for the application itself, not for actual shares.
A Subject to Sauda deal works differently. Using the same XYZ Limited example, here the buyer only pays if the seller actually receives an allotment of shares. If the seller gets no shares at all, the whole deal is simply called off and no money changes hands. Because the buyer only pays when there is a real allotment to hand over, Subject to Sauda prices usually end up higher than Kostak Rate prices for the same IPO.
GMP itself is really a summary of how eagerly people are striking these Kostak and Subject to Sauda deals. When dealers see strong appetite for an IPO application, both rates tend to rise, and trackers convert that appetite into the one headline GMP number you see on your phone.
There is one more thing worth knowing here. None of this runs through a broker, a stock exchange, or any kind of escrow account. It works purely on the dealer's word and reputation. Simply checking a GMP number carries no risk by itself, but anyone who actually tries to strike a Kostak or Subject to Sauda deal is trusting a stranger to pay up, with no legal system standing behind that promise if they don't.
Why Retail India Cannot Stop Checking It
Three things have made GMP the number everyone watches.
It fills the waiting period. Once an IPO closes, there are several days before the shares actually list. Subscription numbers (how many times more shares were bid for than were on offer) are known by then, but nobody knows the opening price. GMP feels like it answers that question, even when it cannot.
Small and Medium Enterprises (SME) IPOs move a lot on listing day. SME IPOs are share sales by smaller companies, listed on a separate, smaller part of the stock exchange, with fewer shares available. That makes their listing day swings much sharper than a large mainboard IPO (a listing by a bigger, more established company), which is exactly the kind of story people want to share.
Tracking websites made it feel official. What used to be dealer gossip is now shown on polished dashboards with live updates several times a day, complete with charts and profit calculators. The packaging makes it look far more reliable than it is.
You may also want to read: Zepto IPO: Why the Valuation May Fall From $7B
Two IPOs, Same Listing Day, Two Different Stories
Here is where it gets interesting. Two SME IPOs, Kratikal Tech and Vinit Mobile, both opened for bidding on June 30, 2026, closed on July 2, and listed on the very same day, July 7. As close to a fair, side-by-side comparison as the market offers.
Kratikal Tech is a cybersecurity company that sells AI-driven security software. Its shares were priced at ₹135 and it listed on the BSE (Bombay Stock Exchange) SME platform. Through the subscription window, its GMP moved around quite a bit, starting near ₹15 to ₹17 on Day 1 (about an 11% to 13% implied gain), then climbing as high as ₹78 by the last update before listing (implying close to a 58% gain).
The real story, though, was in the subscription numbers. By the time bidding closed, Kratikal Tech had been subscribed 154.97 times over, with retail investors (ordinary applicants like you) bidding 218.48 times their quota, big institutions (QIB, short for Qualified Institutional Buyers) bidding 145.82 times theirs, and wealthy individual investors (NII, short for Non-Institutional Investors) bidding a massive 324.64 times theirs. That is overwhelming demand across every single investor category, not just retail hype.
On listing day, the stock opened at ₹192, a 42% premium over its issue price, before easing slightly to trade around ₹182, still a strong 35% gain, later in the day. Here, both GMP and the subscription numbers pointed the same way, and the stock delivered.
This did not turn out to be a one-day flash either. Weeks after listing, Kratikal Tech was still trading in the ₹170 to ₹185 range, comfortably above its ₹135 issue price. The listing day gain mostly held, which is not something every SME IPO manages.
Vinit Mobile is a mobile phone retail company. Its shares were priced at ₹158 and it listed on the NSE (National Stock Exchange) SME platform. By the time subscription closed, its GMP had faded all the way down to zero, no premium at all.
Its subscription numbers told the same discouraging story. The issue was subscribed only about 1.62 times overall. Retail investors bid a modest 2.18 times their quota, but QIB demand barely crossed 1.00 times, and NII demand came in under 1.00 times at roughly 0.80. Institutional and large investors, in other words, were simply not convinced.
On listing day, the stock opened at ₹155, a 1.9% discount to the issue price. It then slipped further, hitting its lower circuit (the lowest price the exchange allows a stock to fall to in a single day, after which trading in it pauses) at ₹147.25, a 6.8% loss for the day.
Notice what happened here. GMP was not wrong about the direction for Vinit Mobile. It had already turned cold before listing. But the number that told the clearest story here was not GMP at all, it was the subscription data, where the gap between Kratikal Tech's 155x demand and Vinit Mobile's 1.6x demand was far starker and far earlier than anything GMP showed.
And the story kept getting worse for Vinit Mobile after listing day. By late July 2026, the stock had fallen further to around ₹75, roughly half its ₹158 issue price and a fresh 52-week low. The 6.8% dip on listing day was just the beginning of a much bigger slide, a reminder that the listing day number, whether from GMP or the opening trade, is only the first data point, not the final word.
Same week. Same exchange segment. Same listing date. One IPO rewarded GMP-watchers and subscription-watchers alike. The other rewarded only the people who looked past GMP and noticed the subscription numbers were weak from the start.
Why GMP Gets It Wrong More Than People Admit
The Kratikal Tech story is exactly the kind of example that keeps people hooked on checking GMP. But treating one correct call as proof that GMP always works ignores a few real problems.
- It is a snapshot, not a forecast. As both IPOs showed, GMP for the same IPO can swing sharply within days, and even within hours, right up to the morning of listing.
- Nobody verifies the trades. There is no central record confirming that shares actually changed hands at the quoted price. It is dealers reporting what they claim to be seeing.
- It reflects mood, not the business. GMP tells you what a small group of speculators currently feels, a bit like how India VIX measures nervousness across the whole market. It says nothing about whether the company's numbers or valuation (whether the share price is fair for what the company actually earns) justify that feeling.
- SME IPOs are easy to sway. With a small number of shares in circulation, it takes far less money to move the grey market price of an SME IPO compared to a large mainboard listing.
Even the websites that track GMP admit this in their own fine print. Several openly state that the number sits outside SEBI's rules and should be treated only as an unofficial mood reading, not something to base an investment decision on.
What Else You Should Look At
GMP is not useless. It is a real, if noisy, read on sentiment. The mistake is using it as the only thing you check. As the Kratikal Tech and Vinit Mobile comparison shows, subscription numbers, especially from QIB and NII categories, often tell a clearer story much earlier. Here is what is worth looking at alongside GMP, including basics like how much of the company its own promoters still hold.
| Signal | What It Tells You | Why It Holds Up Better |
|---|---|---|
| Subscription numbers | How much real money was actually bid across investor categories | Backed by actual bids placed through the exchange, not dealer chatter |
| Demand from big institutions (QIB) | Whether large institutions, who study the company closely before investing, are convinced | Institutions typically dig deeper into the company's numbers before committing money |
| Company basics | Whether the issue price is fair against earnings and growth | Decides if any listing day gain is likely to last |
| Overall market mood | Whether investors are in a risk-taking mood right now | A weak market can flatten even a well-subscribed IPO's debut |
Swipe to see the full table on smaller screens.
Common Mistakes to Avoid
- Applying only because GMP looks high. A high GMP just means some traders feel good about the stock right now. It says nothing about whether the company itself is a good business. That feeling can change overnight, so do not let it be your only reason to apply.
- Trusting an old GMP number. GMP is updated many times a day and can look completely different from one day to the next. Vinit Mobile's GMP had dropped to zero by the time it listed, even though it looked healthier earlier. Always check today's number, not the one you saw a few days ago.
- Ignoring the subscription split. An overall subscription number can hide weak institutional interest. Vinit Mobile's retail portion looked reasonable at 2.18 times, but its QIB and NII portions barely crossed 1 time, a warning sign the headline number alone did not show.
- Treating every IPO's GMP the same way. Remember, SME IPOs (small company listings) have far fewer shares available than mainboard IPOs (bigger, more established companies). That means it takes much less money to push their GMP up or down, which makes the number less trustworthy for SME stocks.
- Believing a GMP quote is a done deal. GMP prices come from informal conversations between dealers, not a stock exchange. Nobody has to honour the price they quoted, and there is no official body making sure they do.
- Stopping at the listing day number. Vinit Mobile's real damage happened in the weeks after listing, not on day one. A single day's price, up or down, is only the first data point, not the final word on how the stock will do.
FAQ
What does GMP mean in an IPO?
GMP stands for Grey Market Premium. It is the extra price some traders are willing to pay for IPO shares before those shares officially list on the stock exchange. This trading happens in an informal, unofficial market, so the number is really just an opinion, not a confirmed price.
Is checking GMP legal in India?
Yes, looking up a GMP number is not illegal. But the trades that create that number happen outside SEBI's (Securities and Exchange Board of India's) rules and outside any stock exchange. That means if a dealer quotes a price and later does not honour it, there is no official body you can complain to.
Can GMP change after I have already applied for an IPO?
Yes, very often. GMP can be updated several times in a single day. Kratikal Tech's GMP moved from around ₹15 on Day 1 to as high as ₹78 just before listing, and Vinit Mobile's GMP dropped all the way to zero by the time it listed. The number you saw when you applied may be very different by the time the stock actually lists.
Does a high GMP mean I am guaranteed to make money?
No. GMP is just a guess made by a small group of traders, not a confirmed trade or an official forecast. It happened to point the right way for Kratikal Tech, but that is not a promise. The overall mood of the market and the number of real applications an IPO receives, especially from institutions, can both change the outcome on listing day.
What should a beginner check besides GMP before applying for an IPO?
Check the subscription numbers, which show how many real applications the IPO received from big institutions (QIB, short for Qualified Institutional Buyers), large individual investors (NII, short for Non-Institutional Investors), and ordinary applicants like you (retail). Also take a quick look at what the company does and whether its share price seems fair compared to its profits. These give a fuller, steadier picture than GMP alone.
Key Takeaways
- GMP is an unofficial, unregulated guess at listing sentiment. It is not a confirmed price.
- It can be a fair guide sometimes, like with Kratikal Tech, but it can also fade to nothing within days, like with Vinit Mobile.
- Subscription numbers, broken down by investor type, often show a clearer and earlier signal than GMP alone, as the 155 times versus 1.6 times gap between these two IPOs showed.
- SME IPOs see the sharpest GMP swings because they have fewer shares in circulation.
- Listing day is not the end of the story. Kratikal Tech mostly held its gains in the weeks after, while Vinit Mobile fell much further, down to roughly half its issue price by late July 2026.
- Use GMP as one small clue, never as the only reason to apply for an IPO.
Go Deeper
- FII vs DII: Who Is Really Buying the Indian Stock Market?
- Byju's Aakash Deal: What $2 Billion Really Means
- SBI Funds Management IPO: What India's Biggest AMC Listing Means
Disclaimer: This content is for educational purposes only and should not be considered investment advice. Markets carry risk, and past patterns do not guarantee future performance. Please consult a SEBI-registered investment advisor before making any investment decisions.