Is GMP Truly Reliable?

I applied for a few IPOs based on strong Grey Market Premium trends, but while they opened firm, the prices corrected sharply soon after listing. Does this mean GMP isn’t a reliable indicator for IPO performance? - Chitra W 

Editor Responds: Grey Market Premiums (GMPs) simply indicate pre-listing sentiment and are not always accurate predictors of listing or post-listing performance. A strong GMP often reflects short-term demand, but once the stock lists, real factors such as valuations, fundamentals, market mood, and profit-booking take over, leading to sharp price swings. Many IPOs with high GMPs have disappointed investors after listing. Therefore, GMP should be viewed as just one reference tool, not a basis for investment decisions. Sound research and fundamentals matter more.