Shares worth over Rs 50,000 crore to unlock soon; sellers may sweat

Choppy markets, dropping valuations make post-IPO exits via block deals challenging

Shares worth over ₹50,000 crore (or approximately $6 billion) are set to become freely tradable between now and April 10.

 

Historically, such substantial volumes have been absorbed by a buoyant block-deal market. However, this time, private equity (PE) firms and institutional investors holding pre-initial public offering (IPO) or anchor book shares may face an extended wait amid challenging market conditions.

 

Market participants note that the steep decline in stock prices has made executing large block deals increasingly difficult. Many PE firms and other major investors now face a dilemma: Whether to sell at reduced valuations or hold out in hopes of a market rebound.

 

This predicament is already evident in the numbers. In January, block deal transactions totalled less than ₹26,000 crore, sharply down from the 2024 monthly average of ₹50,763 crore. The trend has continued into February, with deal volumes shrinking further. As of February 14, only ₹5,023 crore worth of deals had been executed, with several days seeing no significant transactions.

 

The challenges in executing block deals stem from weakened market sentiment, driven by lacklustre corporate earnings in the September and December quarters, a strengthening US dollar, and rising American bond yields. Moreover, policy shifts in the US following Donald Trump’s return to the presidency have prompted foreign portfolio investors (FPIs) to scale back exposure to emerging markets like India. 

 

So far in 2025, the Nifty 50 has declined 3 per cent, pressured by sustained FPI selling. The index has been on a downward trajectory since October, falling 11 per cent. FPIs have offloaded shares worth ₹1.04 trillion in 2025, so far, and analysts note that without strong domestic institutional buying, the impact of these outflows would have been even more pronounced.

 

“Many of the shares whose lock-in periods are expiring may be trading below their issue price. If that is the case, I don’t foresee many block deals happening. Valuation, market sentiment, and volatility are critical factors in executing share sales. The current volatility makes it difficult for holders to find value and exit,” said Deepak Kaushik, group head of equity capital markets at SBI Capital Markets.

 

Some bankers believe that block deals may still occur in marquee blue chips or stocks that have performed well post-listing. “When the lock-in period ends, the decision to sell depends on the stock price and investors’ outlook. For stocks that have done well, we may see profit-taking,” said Chirag Negandhi, managing director of JM Financial.

 

However, not all share this optimism. Many stakeholders are expected to wait until market volatility subsides before making any moves. “Even some IPOs in advanced stages of execution have been put on hold as issuers await calmer market conditions. Unless there is stability in US trade policy, we expect choppy markets and a muted pipeline for both block deals and IPOs,” added Kaushik.

 

Block deals involve large share sales in listed companies by existing shareholders, executed through a separate window provided by stock exchanges. These transactions enable institutional investors to acquire or divest significant stakes without disrupting market prices. Typically, block deals thrive in bullish markets with ample liquidity.