Foreign portfolio investors intensify sell-off pressures in Indian IPOs post-30-day lock-in

A Sebi study reveals that foreign portfolio investors are leading sell-offs in Indian IPOs, causing sharp share price declines around the first unlock period, with exits increasing substantially over one year and highlighting changing market dynamics.

Foreign portfolio investors emerged as the biggest sellers among anchor investors in Indian initial public offerings, and a Sebi study has found that heavy exits can put sharp pressure on share prices when the first 30-day lock-in expires. The regulator’s analysis of 242 mainboard IPOs listed between April 2022 and October 2025 suggests that selling by early backers is most visible around the first unlock window, even though the effect fades later. According to the study, IPOs in the highest exit-intensity band, where more than 10% of anchor holdings were sold, saw an average price impact of minus 3.5% in the T+29 to T+33 period.

The findings also show that the pressure rises with the size of the sell-down. Where 2.5% to 10% of anchor holdings were sold, the average price impact was around minus 1.3%, while exits of up to 2.5% were associated with a smaller decline of about minus 0.4%. The study said the effect was comparatively muted after the 90-day unlock period, with average and median changes close to zero across all three exit bands. In a separate explanation of how the system works, market education materials note that anchor investors are usually institutional buyers such as mutual funds, insurers and foreign portfolio investors, and that 50% of their allocation is locked for 30 days while the remaining half is locked for 90 days.

FPIs were also the heaviest sellers in the most aggressive exit bucket, disposing of 24.5% of their anchor allocation on average, ahead of corporates at 23.1% and other qualified institutional buyers at 21.6%. The longer-term pattern was just as striking. Aggregate weighted exits climbed from 3.5% at T+30 to 9.3% at T+60, 18.5% at T+90, 34.4% at T+180 and 50.7% by T+365, suggesting that roughly half of all anchor allotments are sold within a year. FPIs alone had sold about 60% of their allocation by T+365, amounting to roughly ₹22,474 crore against an anchor allotment of ₹37,491 crore.

Smaller IPOs tended to see sharper anchor exits, with issues in the ₹0-250 crore range recording a 72.5% exit by T+365 compared with 40.8% for deals in the ₹1,001-2,500 crore bracket. That pattern fits a broader picture in which FPIs have become increasingly prominent in India’s primary market. Business Standard reported that in 2024 they invested ₹25,300 crore through IPO anchor books, overtaking domestic mutual funds, and accounted for 46.6% of shares sold in the anchor category, the highest share since 2021. The Sebi study’s conclusion is that anchor selling creates a temporary supply overhang around the first unlock date, but that the market generally absorbs the pressure over time.