Shares of NTPC Green Energy, a subsidiary of NTPC, have experienced a significant decline this week, dropping by 9.5% so far. The stock hit a new 52-week low of ₹95.50 on the Bombay Stock Exchange (BSE) during Thursday’s trading session. This sharp decline comes in the wake of the company’s three-month lock-in period ending on February 24, leading to increased selling pressure in the market. The expiration of the lock-in period may have prompted early investors or stakeholders to offload their holdings, contributing to the downward movement in the stock price.
With the conclusion of the three-month lock-in period, approximately 183 million shares of NTPC Green Energy have now become available for trading. These shares account for nearly 2% of the company’s total outstanding shares. Previously, these shares were subject to restrictions, preventing their sale in the open market. However, with the expiration of the lock-in period, investors who held these restricted shares are now free to trade them, potentially increasing market liquidity and influencing the stock’s price movement.
A three-month share lock-in period refers to a predetermined duration of three months during which certain shareholders are restricted from selling or transferring their shares in the stock market. This restriction is typically imposed following an Initial Public Offering (IPO) or other stock issuance to prevent a sudden influx of shares into the market, which could lead to excessive volatility or a sharp decline in stock prices. By temporarily limiting the ability to sell, the lock-in period helps maintain market stability and allows the stock to establish a more balanced trading pattern before these previously restricted shares become available for public trading.
During the lock-in period, certain groups of shareholders—including company insiders, employees, and early investors—are prohibited from selling or trading their shares in the open market. This restriction is implemented as a precautionary measure, particularly after events like an Initial Public Offering (IPO) or other stock issuances, to prevent a sudden surge of shares being offloaded. If a large number of shares were to be sold immediately, it could lead to excessive price fluctuations and heightened market volatility. By temporarily restricting these shareholders from selling, the lock-in period helps stabilize the stock price and allows for a more orderly transition as the company’s shares adjust to public trading conditions.
Once the lock-in period comes to an end, shareholders who were previously restricted from selling their shares gain the freedom to trade them in the open market. This transition often results in a temporary increase in selling activity, as a significant number of shares become available for trading at the same time. The sudden influx of shares can sometimes lead to a short-term dip in stock prices, as supply temporarily outweighs demand. However, the long-term impact of this event is influenced by various factors, including overall investor sentiment, market conditions, and the company’s financial performance. While some investors may choose to sell their holdings immediately, others may retain their shares based on their confidence in the company’s future prospects.
The share price history of NTPC Green Energy reflects a notable downward trend over various timeframes. Since the beginning of the year (Year-to-Date, YTD), the stock has recorded a decline of 24.95%, highlighting a substantial drop in its market value over this period. Looking at a shorter timeframe, the stock has fallen by 21.54% over the past three months, indicating a persistent decline. More recently, in just the last one month, NTPC Green Energy shares have witnessed an 11.5% drop, suggesting continued selling pressure in the market. These price movements reflect the stock’s performance in different periods, influenced by various market dynamics and investor sentiment.