If you haven’t got some good initial public offers (IPOs) recently, don’t be disheartened. You can take positions in these stocks after the lock-in period of anchor investors is over. This is when some anchor investors sell their shares. In most cases, this results in a fall in the stock price, and this is usually when some smart investors come and buy these stocks. Is there such an opportunity for you right now?
when the stock fell
According to a note issued by Edelweiss Alternative Research, 76% of the stocks listed this year saw selling pressure by anchor investors after the lock-in period ended. On the day of the end of the lock-in period, these stocks saw an average fall of 2.6%.
The note further said that selling pressure is still persisting in the market. Abhilash Pagaria, Head, Alternative and Quantitative Research, Edelweiss Securities, wrote in the report, “The day after the lock-in period for anchor investors was lifted, 61 per cent (25 out of 41) stocks fell by 2.2 per cent. After 5 days, 61 per cent (25 out of 41) stocks declined by 2.2 per cent. There was a decline of 3.9 per cent in 61 per cent of the issues.”
Anchor investors have a lock-in period of 30 days, which starts from the day of allotment of shares.
Why do stocks fall?
Higher valuations have been a concern for most investors. Contrary to their fundamentals, many IPOs are valued at very high levels. Shyam Shekhar, Chief Ideator, ithought Advisory said, “Many anchor investors are trying to exit with higher valuations. Retail investors do not have enough buying power in these stocks. Hence, the selling pressure has increased. Is.”
“Many anchor investors do not have a long-term view on the stock,” said Vikas Gupta, Founder and Chief Investment Strategist, Omniscience Capital. They had invested for short-term gains and now they are looking for exit opportunities.”
Lock-in period is about to end in these stocks
What should investors do?
A money manager on the condition of anonymity said, “Intraday traders can short-sell these stocks with appropriate stop losses. However, do so in select stocks. Short on all stocks that have come out of the lock-in period.” -Sell. If this trend continues and the market remains volatile, you can make good money through this strategy.”
For long-term investors who could not get the IPO, a fall in the stock during the lock-in period could be a buying opportunity. However, they should also take some precautions. Shyam Shekhar said, “Recently, some stocks listed have declined, but their valuations are still very high. Hence, these should be invested wisely and keeping a long-term outlook in mind.”
.