A significant wave of share lock-in expiries is poised to hit the Indian stock market, potentially unlocking a staggering $45 billion worth of shares for trading. According to a report by domestic brokerage Nuvama, this crucial phase will span from January 6 to April 30, impacting a total of 96 newly listed companies.
What Does Lock-In Expiry Mean for Investors?
When a company goes public through an Initial Public Offering (IPO), its pre-IPO shareholders—including promoters, early investors, and private equity funds—are typically barred from selling their shares for a specified period. This is known as the lock-in period. Its expiry allows these shareholders to finally sell their holdings on the open market. While not all locked-in shares are sold immediately, the sudden increase in available stock can lead to heightened volatility and potential short-term price corrections if a large number of shareholders decide to exit at once.
Key Companies and Dates to Watch
The Nuvama report, which tracked all shareholders in companies listed up to January 4, highlights several firms with imminent lock-in expiries. The action begins in earnest in January itself.
Meesho leads the pack with a substantial 110 million shares, representing 2% of its total equity, becoming eligible for sale starting January 7. On the same day, Aequs will see 17 million shares (2%) and Vidya Wires will have 9 million shares (4%) freed from lock-in restrictions.
The following weeks present a busy calendar. Nephrocare Health Services has two separate expiry dates: 2 million shares on January 9 and 3 million shares on January 14. CORONA Remedies and Wakefit Innovations will have their lock-in periods end on January 12, followed by Park Medi World on January 14.
Later in January, other notable expiries include ICICI Pru AMC (7 million shares, 1%) on January 16, KSH International (3 million shares, 4%) on January 19, and Gujarat Kidney & Super Speciality on January 27.
Expert Advice for Market Participants
Market analysts advise retail and institutional investors to monitor these lock-in expiry dates closely. The primary risk is a supply overhang; if a large cohort of early investors chooses to liquidate their positions simultaneously, it could exert downward pressure on the stock's price in the near term.
However, experts also caution that a sell-off is not inevitable. A substantial portion of the shares becoming free float is held by company promoters and their group entities, who may have a long-term commitment and not sell immediately. Therefore, while these dates are critical markers for potential volatility, they do not automatically signal a bearish trend for the affected stocks.
For the everyday investor, being aware of these schedules allows for more informed decision-making. It is prudent to assess the company's fundamentals, promoter holding pattern, and overall market sentiment around these key dates to navigate possible price swings effectively.
