The IPO Grey Market: GMP, Kostak and Subject-to-Sauda, Decoded

Before a share lists, an unofficial market already trades it — and its own jargon. Here's what GMP, Kostak and STS actually mean.

12 September 2026 · CoinWhisperer

Long before an IPO lists, a shadowy, unofficial market is already putting a price on it. It's unregulated, cash-based and runs on trust between dealers — but its numbers are quoted everywhere, so it helps to understand the three terms you'll keep seeing: GMP, Kostak and Subject-to-Sauda.

GMP — Grey Market Premium

The grey market premium is the extra amount (over the issue price) that buyers are willing to pay in the grey market for shares that haven't listed yet. If an IPO is priced at ₹100 and the GMP is ₹40, the grey market is implying a listing around ₹140 — a ~40% expected pop.

GMP is really a sentiment gauge. It moves with subscription figures and market mood, and it can collapse overnight. It is not a promise, and by listing day it's often wrong.

Kostak — selling the application itself

A Kostak rate is a fixed price at which you can sell your entire IPO application — before allotment is even known. Say the Kostak is ₹800: a dealer pays you ₹800 today to take over your application, whatever happens. If you're not allotted, you still keep the ₹800; if you are, the deal terms decide who benefits. It's a way to lock in a small, certain gain and offload the uncertainty of allotment.

Subject-to-Sauda (STS) — a deal that's contingent on allotment

Subject-to-Sauda is a deal to sell your application that is honoured only if you're allotted. Unlike Kostak (paid regardless), an STS deal pays out per the agreed rate only when shares are actually allotted to you. STS rates are quoted per application and typically imply a larger sum than Kostak because they carry the allotment risk.

Kostak vs STS in one line: Kostak pays you a fixed amount whether or not you're allotted; Subject-to-Sauda pays only if you're allotted.

Why you should treat all of this with caution

It's unofficial and unregulated. There's no exchange, no clearing, no recourse if a deal is dishonoured — it runs entirely on dealer trust.
GMP is volatile and often wrong. A rumour price can vanish, and plenty of high-GMP IPOs have listed flat or below issue price.
It can be manipulated. Thin, opaque markets are easy to nudge to create hype.

Use grey-market numbers as one soft signal of sentiment, not as a basis for how much to invest. The fundamentals, valuation and your own risk appetite should drive the decision.

Educational explainer, not investment advice. The grey market is unofficial and unregulated; CoinWhisperer does not facilitate grey-market trades.