What is the Full Form of GMP in Share Market?

The GMP Full Form in Share Market is Grey market premium. The share market seems to be easy, but it can hide investing consideration. The Grey Market Premium (GMP) is concerned inside trading of an IPO. The tutorial covers intricacies of GMP, its importance, and its disadvantages. Understanding of GMP under gray market knowledge. The gray market is unregulated and more transparent compared to stock markets. Investors can trade IPO applications or allotments before stock exchange listing. Unauthorized trading assists in speculation of the price of the IPO after listing.

Investor Interest

Grey Market Premium (GMP): It is the premium amount at which the shares of the firm’s IPO are trading in the grey market over the issue price. Any positive GMP will display investor interest and that the listing shall be strong, for the grey market price is at a premium. On the other hand, negative GMPS could point toward difficulties in the performance of an IPO.

Importance of Grey Market Premium

The GMP is important to the IPO ecosystem but is unauthorized and unregulated. A good GMP can reflect IPO investor interest. The majority of investors are bullish on company prospects and expect the post-listing share to rise. In this regard, investors might keep GMP in mind during the DPS IPO application. High or low GMPs can encourage excitement, study, or caution.

Risk of manipulation

Gray markets have zero rules hence can be tampered with by other parties. One can have artificial GMP inflation and deflation to fool investors. Gray markets are in nature opaque where, in the first place, information on GMP and the sources of it cannot be checked. Hence, what an investor should do is, be cautious and seek credible sources.