Over the next four months, the Indian stock market is set to welcome shares worth a whopping Rs 1.47 lakh crore ($17.7 billion) as the lock-in periods of 66 companies come to an end. Among these companies are familiar names like Tata Technologies, Exicom Telesystems, IREDA, Honasa Consumer (the folks behind Mamaearth), and JSW Infra, with their lock-in periods expiring between April and July 2024.

The first batch of companies, including Platinum Industries, Exicom Telesystems, Bharat Highways Invit, and others, will see their one-month lock-in period ending between April 1 and April 18. Next up, a group of 22 companies, such as Mukka Proteins, Jyoti CNC Auto, and Medi Assist Healthcare, will witness the expiry of their three-month lock-in period between April 8 and June 17.

Then, we have a sizable chunk of 38 companies, including Honasa Consumer, IREDA, and JSW Infra, facing the end of their five and six-month lock-in periods between April 1 and July 29.

Global Surfaces bid farewell to its one-year lock-in period on April 1, while IKIO Lighting will join the party on June 17. Additionally, 15 companies, including Bikaji Foods, Landmark Cars, and Inox Green, will open their 1.5-year lock-in periods between April 15 and July 2.

Interestingly, the lock-in period for Global Surfaces, Sai Silks (Kalamandir), and JSW Infrastructure has already opened on Monday. And guess what? The stocks of all these companies ended the session in the green on Monday.

After reading the above, you may be wondering what is a lock-in in an IPO; how its expiry impacts stocks. Let’s understand: 

What is IPO Lock-in Expiry? 

Remember we discussed all about IPOs in one of our earlier posts? When a company goes public and issues shares through an initial public offering (IPO). There’s often a lock-in period imposed on certain shareholders, like company insiders or early investors. During this lock-in period, these shareholders are restricted from selling their shares in the open market. 

Why does this matter to investors?

Historically, it’s seen that the expiry of the lock-in period can have a significant impact on the stock’s price. When insiders or early investors are finally allowed to sell their shares, it can flood the market with supply, potentially driving down the stock’s price.

How does lock-in expiry impact a particular stock?

Lock-in expiry can have varied impacts on different stocks. If there’s a rush to sell off shares by insiders or early investors, it could lead to downward pressure on the stock’s price. On the other hand, if these shareholders decide to hold onto their shares, it might indicate confidence in the company’s future prospects.

What do past trends suggest?

In the past, we’ve seen several stocks experiencing a decline after the end of their lock-in periods, as insiders rush to cash out on their investments. However, there have also been instances where stocks have remained relatively stable or even rallied after the lock-in period expired.

Also Read: 5 stocks to go ex-dividend this week: What are they and what does this mean?

Is this a good time to buy the stock?

It depends on a variety of factors, including the company’s fundamentals, market conditions, and investor sentiment. While the end of the lock-in period could create short-term volatility, it doesn’t necessarily mean the stock is a bad investment. It’s essential to do your research and consider all factors before making any investment decisions.

Whether you’re considering buying shares of a company with an upcoming lock-in expiry or simply curious about market dynamics, understanding the ins and outs of lock-in periods can help you make informed investment choices. Happy investing!

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Disclaimer: The above content is for informational purposes only. Please consult a SEBI-registered investment advisor before investing in market-linked instruments.