Which types of investors should pay attention to IPO GMP?

6 Types of Investors Who Should Closely Track IPO GMP

1. Short-Term Traders (Listing Day Players)

Why It Matters:

• GMP helps predict listing pop for quick profits
• Identify overhyped IPOs to short on listing day

Key Metric: Compare GMP trend vs. subscription data

2. HNIs Applying in Large Lots

Why It Matters:

• High GMP = Better allotment chances justify big applications
• Kostak rates help optimize application strategy

Pro Tip: Track GMP velocity in last 6 subscription hours

3. Arbitrageurs

Why It Matters:

• Exploit price differences between grey and official markets
• Identify mispriced IPOs where GMP diverges from fundamentals

Tool Needed: Real-time GMP feeds with volume data

4. Pre-IPO Investors

Why It Matters:

• GMP indicates optimal exit timing before listing
• Spot overheated sectors attracting premium valuations

Caution: Grey market prices often exceed fair value

5. Sector-Specialist Fund Managers

Why It Matters:

• GMP trends reveal institutional sentiment shifts
• Early warning on sector rotations (e.g., tech GMP crash in 2022)

Data Point: Track GMP/sector PE correlation

6. Retail Investors Applying Strategically

Why It Matters:

• Avoid IPOs with crashing GMP (high listing loss risk)
• Focus applications on IPOs with rising GMP + strong subscriptions

Safe Threshold: Minimum 20% GMP with 10x+ QIB subscription

Investors Who Can Ignore GMP

• Long-term holders (GMP doesn’t predict 1+ year performance)
• Index fund managers (irrelevant to passive strategies)
• Debt investors (equity premium irrelevant)

GMP Tracking Tools by Investor Type

Investor	Best Tool	Frequency
Traders	Real-time GMP alerts	Hourly
HNIs	Dealer WhatsApp groups	Daily
Retail	IPO tracking websites	Pre-application