Shares of FSN E-Commerce Ventures Ltd., owner of beauty e-retailer Nykaa, fell as much as 5% today as pre-IPO investors continue to exit the stock after the expiry of lock-ins. Stocks often fall after lock-ins expire, as investor selling puts downward pressure on shares. At day’s low, Nykaa shares were down at at ₹174.5, before paring some losses. At 11:30 am, the stock was down 3.5% at ₹177.20.
Nykaa shares had got listed last November and the mandatory lock-in period for pre-IPO investors came to an end on November 10. Apart from lock-in expiry, concerns over valuations and rising global rates have also affected some high-profile internet stocks, even as the broader Indian stock market has outperformed global peers and scaled new peaks.
Reports said that private equity player Lighthouse India will sell shares worth ₹335 crore in FSN E-Commerce Ventures through a block deal today.
On Friday, private equity player TPG Growth sold Nykaa shares worth ₹1,000 crore. These shares were acquired by various entities, including Societe Generale, HSBC Indian Equity Mother Fund and Goldman Sachs (Singapore) Pte, among others.
Expert Take: What to do with the stock?
“Nykaa is witnessing high volatility amid the exit of PE funds after the end of the one-year lock-in period. The counter is trying to find its feet in the ₹170-160 area but is struggling to sustain itself above the ₹200-mark. It must cross the 220 mark for any meaningful recovery, while if it falls below the 160 mark, the pain will continue for more downside. For the time being, new investors should avoid this counter, while existing investors can keep their stop loss at ₹160,” said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.