New-age shares Nykaa rose more than 10 percent in today’s morning deals, beating market expectations that the stock will come under intense selling pressure.
FSN Commerce Ventures (Nykaa) made its market debut on November 10 last year after a successful IPO.
Regulations had banned pre-IPO investors from trading stocks for a year. But the expiration of the lock-in will not affect the business fundamentals of these startups.
The lifting of the curbs on Thursday sparked speculation that the stock will come under pressure, with pre-IPO investors looking for an exit. In Nykaa, according to JM Financial, 67.20 percent of the outstanding shares will become tradable on November 10.
The stock was in line with the broader market, trading more than 1,000 points higher. Investor sentiment has been boosted as declining inflation rates in the US have raised hopes that an end to the Fed’s rate hike is in sight.
Despite rising more than 10 percent today, Nykaa’s current market price is well below its 52-week high of Rs 429.86 recorded on November 26 last year.
The steel decline in Nykaa coincided with the decline in other new-age technology stocks. Investors have expressed doubts about the profitability of the valuation of these tech startups.
Earlier in July, another new-age stock, Zomato, had come under intense selling pressure as the lock-in opened for institutional investors.
The board of lifestyle retailer FSN E-Commerce Ventures Limited
The company’s board had previously approved a 5:1 bonus issuance of shares.
“The company believes Bonus Shares will encourage long-term private investor participation, as well as broader share ownership,” it had said.
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