InvestorQ : Can you tell me about the price fall in Paytm on 15-December due to the anchor lock-in ending. Do you see the selling pressure continuing?
Anamika Sodhani made post

Can you tell me about the price fall in Paytm on 15-December due to the anchor lock-in ending. Do you see the selling pressure continuing?

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Angel dcosta answered.
5 months ago
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A number of recent digital IPOs like Zomato, Nykaa and PB Fintech had come under pressure on the day of anchor lock-in ending. On 15th December, this was evident in the Paytm counter too. Anchor investors are typically allotted shares a day ahead of the IPO opening with a lock-in of just 1 month. On 15th December, the 1-month anchor lock-in for One97 Communications (Paytm) was completed and the price did react sharply.

Paytm did not have a very successful IPO in terms of subscription and post listing show. On 15-December, Paytm opened on the NSE gap-down at Rs.1,421 against the previous close of Rs.1,496; a fall of -5.01%. However, from that point, the stock dipped all the way to Rs.1,296. Paytm’s life time low is Rs.1,271. Post this fall, the stock recovered sharply and closed trading just about 7.6% lower hinting at buying and short covering.

Trading volumes were huge and so was FPI selling. For example, trading volumes on the Paytm counter on NSE was 1.31 crore shares change hands. With Rs.1,797 crore of value traded, Paytm was the most liquid stock on NSE. In addition, the FPI selling was over Rs.3,400 crore with gross selling of Rs.8,500 crore due to the Paytm impact. A total of 8.3 crore shares of Paytm are lying with the anchors as of 14 December.

Will this continue? The billion dollar question is, how many anchor investors would be keen to sell out of the stock 35% below its IPO issue price of Rs.2,150. The answer is not too many. In the case of Zomato and Nykaa, anchors had incentive to sell due to the huge profits on the table. Paytm is a different ball game due to the huge discount to issue price. The next few days would give a clearer picture on big anchors like CPPIB and Blackrock.

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