It makes sense to understand the grey market as it decides the valuation of an initial public offer. However one has to be careful while analysing the grey market premium as Reliance Petroleum in India is a classical case where the grey market premium was exorbitantly hiked in order to present a wrong picture. To make the things simple we will analyse the grey market and same is as appended below:

IPO Grey market is an unofficial market where IPO shares are bought and sold before they become officially available for trading on the stock exchange.

IPO Grey Market is an over-the-counter market where dealers may execute orders for preferred customers as well as provide support for a new issue before it is actually issued.

Grey market trading include trading (selling or buying) applications at certain amount and trading (selling or buying) allocated shares through IPO allotment before they list on stock exchanges.

Grey market trading is usually done among the small set of people who trust each other as there is no official platform or rules define for these trading.

Grey market premium (or grey market price) is a premium amount in rupees at which IPO shares are being traded in Grey Market before they get listed in stock exchange. Grey market premium can be in positive or in negative based on demand and supply of the stock.

Grey Market Premiums are also attached with words ‘Buyer' or ‘Seller'. They tell the price either at which buyers are willing to buy shares or the price at which sellers are willing to sell their IPO shares.

However one has to be careful with grey market pricing and should not take it as a gospel truth as at times these high profile promoters use illegal means to hike the grey market price in order to dupe the general public as a high grey market price will give a wrong picture to the investors.
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