Groww shares fell 10% and locked on lower circuit
Wednesday, November 19, was a very busy day for those investing in the stock market, especially for those investors who had placed bets on the recently listed company Groww. The momentum that the shares of Grow’s parent company, ‘Billionaires Garage Ventures Limited’ had gained since its listing, has suddenly come to a screeching halt today. The stock, which was continuously rising for the last six days, not only took a U-turn today, but the situation became such that the stock fell by 10% and got directly locked on the lower circuit.
Share stuck in ‘lower circuit’
As soon as the market opened on Wednesday, shares of grow Selling pressure was seen. Within no time, the share price fell by 10 percent and reached the level of Rs 169.89. This fall was so sharp that the stock got stuck in ‘lower circuit’. Lower circuit means that the stock cannot fall more than that on that day and only sellers remain present in the market, buyers disappear. Due to which the shares cannot be sold. Because buyers are missing.
On Wednesday itself, the exchange has also changed the ‘circuit limit’ of this share. Earlier this limit was 20%, which has now been reduced to 10%. Its direct effect will be that now this stock will not see fluctuations of more than 10% (bullish or bearish) within a day. This step is usually taken when there is a possibility of high volatility in a stock.
Why are 30 lakh shares stuck?
A technical problem is also stuck in this decline. According to the report of Moneycontrol, about 30 lakh shares of Grow have gone in the auction window of NSE. Now the question arises why did this happen?
Actually, many traders do ‘short selling’ in the stock market. That is, they sell the shares first, in the hope that when the price falls, they will buy it at a cheaper price and equalize their position. It seems that many traders did short selling in anticipation of GRO falling, but when the time came to deliver, they could not arrange for the shares to be delivered. In simple words, they sold goods that they did not have and could not even purchase in time. Because of this, now the time has come for auction of shares to settle these deals, which created an atmosphere of chaos in the market.
All eyes are on December 10
If you are invested in this company or are thinking of investing, then you should note two dates in the calendar. The first date is November 21, when the company will declare the results for the July-September quarter of the current financial year. After listing, this will be the first ‘report card’ of the company, which will show how much the company is actually earning.
But an even bigger and riskier date is 10th December. According to market experts and brokerage firm Nuvama, the one month ‘lock-in period’ of the company’s shares is ending on this day. As soon as this period ends, about 14.92 crore shares will be free for trading. This is about 2% of the total stake of the company. When such a large number of shares come into the market, if old investors start booking profits, then huge pressure can be seen on the share price.
IPO investors are still profitable
Despite all the bad news, one saving grace is that the investors who got shares in the IPO are still making good profits. The company’s IPO came at a price of Rs 100 and despite today’s fall, the share is trading at Rs 169.89. That means it is still about 70% above the IPO price.