In the coming months, investors can expect a significant influx of shares worth Rs. 1.47 lakh crore ($17.7 billion) flooding the domestic market as lock-in periods expire for 66 companies, spanning from April to July 2024. Among these companies are notable names like Tata Technologies, Exicom Telesystems, IREDA, Honasa Consumer (Mamaearth), and JSW Infra, each set to unlock their shares over the specified timeframe.
Beginning in April, the one-month lock-in periods of companies such as Platinum Industries, Exicom Telesystems, Bharat Highways Invit, R K Swamy, JG Chemicals, Gopal Snacks, Popular Vehicles & Services, and Krystal Integrated Services are slated to conclude between April 1 and April 18.
Moving forward, a total of 22 companies, including Mukka Proteins, Jyoti CNC Auto, Medi Assist Healthcare, Epack Durables, Jana Small Finance Bank, and Vibhor Steel Tubes, will see the end of their three-month lock-in periods, expiring between April 8 and June 17.
Furthermore, a broader group of 38 companies, encompassing Honasa Consumer (Mamaearth), IREDA, Inox India, Innova Captab, Muthoot Microfin, DOMS Industries, Tata Technologies, Gandhar Oil, Ask Automotive, Manoj Vaibhav Gems, JSW Infra, and Medi Assist Healthcare, will witness the expiration of their five and six-month lock-ins, spanning from April 1 to July 29.
“Additionally, Global Surfaces concluded its one-year share lock-in period on April 1, while IKIO Lighting’s lock-in is scheduled to expire on June 17, contributing to the dynamic landscape of market activity as investors await the release of these shares.
Unlocking the Lock-In: Understanding Its Impact on Stocks
As the lock-in periods of several companies approach expiration between April 15 and July 2, investors keenly observe market dynamics. Notable firms like Bikaji Foods, Landmark Cars, Inox Green, and Kfin Technologies are among the 15 companies set to unlock their shares during this period.
What Exactly is a Lock-In Period?
A lock-in period denotes the duration during which investors are restricted from selling their investments. The Securities and Exchange Board of India (SEBI) mandates varying lock-in periods for different investor groups. For instance, anchor investors typically face a lock-in period where 50% of their shares are restricted for one month, and the remaining 50% for three months post-allotment. Promoters, on the other hand, encounter a lock-in requirement ranging from 18 months for up to 20% post-issue paid-up capital, to six months for allotments exceeding 20%.
Why Investors Monitor Lock-In Periods?
Understanding lock-in periods is crucial for investors as it directly influences market liquidity. When a company’s lock-in period expires post-IPO, more shares become available for trading, increasing the free float in the market. This surge in supply could potentially lead to a decrease in the stock price, prompting some investors to sell their holdings to secure profits.
Impact of Lock-In Expiry on Stocks
Upon the end of a lock-in period, there’s a possibility of shares entering the market through block deals, thereby augmenting liquidity. However, the impact on stock prices varies based on market sentiment. While some investors might capitalize on the unlocked shares, others may adopt a wait-and-watch approach, gauging market conditions before making a move.
Past Trends and Future Insights
Historically, the end of lock-in periods has triggered diverse responses in stock prices. Instances like Nykaa’s post-IPO investors heavily selling shares after the lock-in period expiration led to a significant price drop. However, not all stocks experience a decline; market sentiment plays a crucial role in determining stock movement.
Is Lock-In Expiry an Opportune Time to Buy?
For investors evaluating post-lock-in expiration scenarios, fundamental analysis remains paramount. If the stock’s fundamentals align with investment goals and the price declines post-expiry due to increased supply, it could present an attractive buying opportunity.
In essence, while the end of lock-in periods introduces potential shifts in market dynamics, investors must conduct thorough research and consider various factors before making investment decisions.
Sources: moneycontrol.com