Even as new listings bring more money into equities, thus expanding overall market capitalisation, these stocks stand to face the heat once the lock-in periods of various categories of shareholders start opening up. Therefore, whenever there are periods of aggressive fund-raising by initial public offerings (IPOs), they are typically followed by a phase of turbulence atleast for these stocks, as a few categories of shareholders gradually start selling off their shares once the mandatory lock-in periods expire.
In March and June, 66 companies will see the expiry of lock-in periods for existing shareholders in various categories from their IPOs. Subsequently, if these shareholders start selling off their stakes, it may lead to a withdrawal of a total of $21.1 billion, shows an analysis by Nuvama Alternative & Quantitative Research. The analysis considers stocks listed until February 20, 2024.