Shares worth Rs 2.2 lakh crore ($26 billion) will be unlocked between April 30 and July 28 as the pre-listing lock-in period of promoters, anchor investors and other shareholders is set to expire. Of this, shares worth approximately Rs 1.26 lakh crore ($15 billion) would be available for sale in the market in May itself, according to a study by Nuvama Institutional Equities.
To be sure, while the expiry of the lock-in period will potentially increase the supply of shares that can be sold, it is not necessary that all these shareholders will sell their stake. Many of them, including the promoters and other long-term investors, are expected to retain their holdings.
The expiry of the six-month lock-in period for Swiggy on May 13 will theoretically mean a supply of 1,897.5 million shares held by non-promoters worth Rs 60,013 crore.
This is among the largest shareholdings that could hit the market in the next 30 days, according to the report. This is followed by Sagility India, Niva Bupa Health Insurance, and Afcons Infrastructure.
On Friday, the lock-in of anchor investors shares of Dr Agarwal’s Healthcare ended and the culmination of six-month periods of Deepak Builders & Engineers, Blue Jet Health, and Afcons Infrastructure cumulatively unlocked 247 million shares. On Monday, 64.8 million shares of Honasa Consumer were unlocked. However, there was little action in these stocks, with three losing marginal value and two gaining.
According to Sudeep Bandyopadhyay, group chairman of Inditrade Capital, there will invariably be selling pressure on the day of lock-in ending as some investors are waiting to sell their shares. “Overall, it is dependent on the market movement,” he said.
Bandyopadhyay expects the market to be range-bound till June amidst the volatility and advises investors to be careful. In the past one month, both the benchmarks, the Nifty and Sensex, have gained more than 10%.
Siddarth Bhamre, Head of institutional research at Asit C Mehta, added that most of the stocks – whose lock-in periods are due to expire – are trading lower than their issue price. He believes the price movements would depends on the opportunities that these investors anticipate as they are strategic investors. “We may not see immediate downward pressure, but upside will be limited,” he said adding that it will vary for different stocks.
The Indian markets have been on a roll with foreign portfolio investors (FPI) going on a buying spree. They snapped up stocks worth Rs 4,223 crore in April, as they turned net buyers for the first time in three months against the backdrop of favourable global cues and reasonably strong macro-fundamentals. The inflows follow a back-to-back net outflow of Rs 3,973 crore in March, Rs 34,574 crore in February, and Rs 78,027 crore in January.