Short-Sellers Trapped in Indian IPOs: Meesho and Groww Cases Explained
AI Summary1 min read
TL;DR
Short-sellers in Indian IPOs like Meesho and Groww are incurring losses due to post-listing rallies, limited share supply, and settlement rules that trigger auctions, raising prices and risks, especially in low free-float IPOs.
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short-sellingIndian IPOssettlement rulesauction mechanismfree float
Short-sellers in newly listed Indian startup stocks are facing losses due to sharp post-listing rallies, thin supply of shares, and India's settlement rules. When short-sellers cannot deliver shares on settlement day, the exchange intervenes through an auction mechanism, which results in higher prices and increased losses for trapped short-sellers. This is particularly problematic in IPOs with low free float, as it amplifies price moves and makes short-selling riskier.
