IPO Lock-in Expiry: $45 Billion in Shares Unlocked, Volatility Ahead?

Introduction: A Wave of Unlocks Hits the Indian Market

The Indian stock market is preparing for a period of potential turbulence as a significant volume of shares from recently listed companies becomes eligible for trading. According to a report by Nuvama, lock-in periods for pre-IPO shareholders in 96 companies, valued at approximately $15 billion, are set to expire between January and April 2026. This event allows founders, promoters, and early-stage investors to sell their holdings on the open market for the first time, raising concerns about increased supply and short-term price volatility.

Understanding IPO Lock-in Periods

An IPO lock-in period is a mandatory timeframe during which pre-IPO shareholders are restricted from selling their shares after a company goes public. This regulation, enforced by the Securities and Exchange Board of India (SEBI), is designed to prevent a sudden flood of shares from hitting the market immediately after listing, which could destabilize the stock price. The duration of the lock-in varies for different categories of investors, such as promoters, anchor investors, and other early backers. Once this period ends, these shareholders are free to liquidate their positions, which can significantly increase the stock's free float and trading volume.

The Scale of the Upcoming Expiries

The scale of the impending unlocks is substantial. The Nuvama report, which covers companies listed up to early January 2026, highlights that the $15 billion figure represents the total value of shares whose lock-in period will end. However, it is crucial to note that not all of these shares are expected to be sold. A significant portion is held by promoters and promoter group entities who often have a long-term strategic interest in their companies. Nevertheless, the potential for a partial sell-off is enough to put market participants on high alert.

Key Companies to Watch in January

The first wave of these expiries is scheduled for January 2026, with several companies on the radar. Investors are closely monitoring these dates as they can trigger temporary price swings.

Market Impact and Investor Caution

The primary concern surrounding lock-in expiries is the potential for increased selling pressure. If a large number of early investors decide to book profits simultaneously, the sudden surge in share supply can exert downward pressure on the stock price. This is particularly true for companies whose stock prices have appreciated significantly since their IPO. For traders, this period can present opportunities for short-term plays, while long-term investors may see it as a chance to enter a stock at a more attractive valuation if a correction occurs.

The Broader IPO Market Context

This wave of lock-in expiries comes after a record-breaking period for the Indian IPO market between 2020 and 2024. However, 2025 saw a marked slowdown, with fewer filings and a cooling of investor sentiment amid market volatility and global economic uncertainty. The average listing day gain for IPOs in 2025 fell to just 9.9%, a sharp drop from over 30% in the previous year. This shift suggests that investors have become more discerning, and the days of mindlessly applying for IPOs for quick listing gains may be over.

Expert Analysis: A Call for Due Diligence

Market analysts advise investors to approach this period with caution. Ajay Garg, managing director of Equirus, noted that newly listed stocks are subject to the same market gyrations as established ones and that institutional investors are typically unfazed by short-term turbulence. However, G Chokkalingam of Equinomics Research warned that the risk of losing money on IPOs is higher at the peak of a boom cycle when pricing becomes aggressive. The consensus is clear: investors should focus on fundamentals, assess the durability of business models, and consider valuation comfort before making investment decisions. The principle of caveat emptor (let the buyer beware) is more relevant than ever.

Conclusion

The upcoming expiry of $15 billion in IPO lock-ins represents a significant event for the Indian equity markets. While it introduces the risk of heightened volatility for specific stocks, it is a normal part of the market cycle. The actual impact will depend on the decisions of large shareholders and the prevailing market sentiment. For retail investors, this period underscores the importance of thorough research and a long-term perspective, moving beyond the speculative chase for listing day gains and focusing on the underlying value of the companies they invest in.