A.C.
One of my two kids was exactly this way. She didn't want to be held by anybody but me. It's something some babies go through and sometimes it's just their personality. My daughter has always been shy. As she got older she became more comfortable with the people who were constant in her life, but it happened at her own pace and not because of anything I made her do or any tricks. Keep doing what you are doing... she's only 5 months old and can't be reasoned with... she cries and wants mommy and your job at this age is to make sure she feels comfortable and safe.
She'll warm up over time... until then, just tell Grandma to be patient and continue to include her on things with the baby.
Good luck!