Zerodha CEO and founder Nithin Kamath has urged retail investors to be more mindful of lock-in periods when investing in newly listed companies, warning that large shareholder exits after these restrictions end can weigh heavily on stock prices. In a post shared on social media platform X, formerly Twitter, Kamath highlighted that while IPOs often attract strong interest from retail participants, many investors fail to track when key shareholders are allowed to sell their holdings.
This oversight, he suggested, can expose investors to sudden downside risks once lock-in periods expire.
Why Lock-In Periods Matter For IPO Investors
Kamath explained that when a company lists on the stock exchange, not all shareholders are free to sell their shares immediately. Categories such as promoters, early-stage investors and employee stock option (ESOP) holders are typically bound by lock-in clauses that may last anywhere between 30 days and 18 months.
These investors often own substantial portions of a company’s equity, making their actions particularly influential. “Since these are large shareholders, whenever they sell, there can often be a downward move in the stock price,” Kamath said. He cautioned that retail investors chasing momentum in newly listed stocks may underestimate this risk if they do not factor lock-in expiries into their investment analysis.
When a company goes for an IPO, not all shareholders can sell their shares immediately. Certain categories of shareholders like promoters, early investors and ESOP holders have to wait anywhere between 30 days to 18 months before they can sell their shares.Since these are large… pic.twitter.com/tsWe8dgc2i
— Nithin Kamath (@Nithin0dha) January 8, 2026
Against this backdrop, Kamath advised investors to monitor lock-in schedules closely, especially when evaluating stocks that have listed in the recent past.
Scale Of Upcoming Lock-In Expiries
Data from Nuvama underscores the potential impact of this issue. Between January 6 and April 30, 2026, lock-in periods for pre-listing shareholders of 96 companies are scheduled to expire. The shares becoming eligible for trading during this period are valued at roughly $45 billion.
However, this figure does not necessarily indicate the volume of shares that will actually be sold in the market. A large share of these holdings remains with promoters and promoter group entities, who may choose to retain their stakes rather than exit immediately.
Kamath On Regulatory Limits In The Broking Business
Separately, Kamath also shed light on structural constraints within the broking industry. In another post dated January 6, he said regulatory limits impose a firm cap on how much a brokerage can expand and how fast it can scale. “Broking is a unique business because there’s a hard ceiling on how much we can grow and the rate at which we can grow. What most people don’t realise is that SEBI has set a 15 per cent open interest (OI) cap at the broker level,” he posted on his official X handle on Tuesday.
While this cap restricts size and growth, Kamath noted that it ultimately serves investors by curbing concentration risk and ensuring no single broker gains excessive dominance in the market.
