When a company moves from a Closed IPO phase to a Listed IPO, it enters a new world of public market scrutiny. However, one important milestone often overlooked by retail investors is the lock-in expiry. Understanding this event can be crucial in managing risk and setting the right expectations after investing in a newly listed company.
What Is an IPO Lock-In Period?
The lock-in period refers to a timeframe after a company goes public during which certain shareholders — such as promoters, anchor investors, and sometimes institutional investors — are restricted from selling their shares. This period can range from 30 days to up to a year, depending on SEBI regulations and the nature of the investment.
Once this lock-in period expires, these early investors are free to sell their shares in the open market — an event that can have a direct impact on the Listed IPO’s share price.
Why Should Retail Investors Care?
The expiry of a lock-in period can trigger a significant rise in share supply, especially if early investors decide to book profits. When a large number of shares hit the market suddenly, the selling pressure may cause the stock to dip — even if the company’s fundamentals remain unchanged.
For retail investors, this can mean:
- Short-term volatility in stock price
- Possible buying opportunities if the dip is temporary
- A need to reassess holding period and expectations
How to Track Lock-In Expiry Dates
The lock-in expiry date is usually mentioned in the company’s prospectus, which is available during the Closed IPO stage. You can also find this information on the stock exchange website or through filings post listing.
Keeping track of these dates allows you to prepare for potential price movements and avoid panic selling triggered by institutional exits.
Smart Moves for Retail Investors
- Avoid buying near lock-in expiry: If you’re planning to invest in a Listed IPO, avoid entering just before the lock-in ends, unless you’re confident in the stock’s long-term story.
- Watch volume and delivery data: A sudden spike in volume with low delivery percentage might indicate short-term speculative selling.
- Use the dip to your advantage: If you believe in the company’s fundamentals, a post-lock-in dip can offer a good entry point.
- Follow anchor investor activity: If well-known institutional investors are holding post lock-in, it may indicate continued confidence.
Final Thoughts
While the Closed IPO phase is all about initial valuation and investor interest, the Listed IPO stage brings new challenges like lock-in expiries. Retail investors should treat these events as important indicators, not red flags. By staying informed and planning ahead, you can navigate volatility with confidence and use such milestones as strategic decision points in your investment journey.
