Zomato share price plunges; heres why!

In the last couple of trading sessions, the share price of newly-listed Zomato went down by almost 13 per cent and in the process, it wiped out almost Rs 15,000 crore of its market capitalisation. What is also noticeable is a higher volume with which the price is dropping. Around 6.8 crore Zomato shares were traded on NSE on Monday (August 23, 2021), which was  54 per cent higher than the two-week average of 4.4 crore shares.   

So, what is the reason behind this fall and does it make sense to invest in them now? One of the reasons for such a higher-than-usual trading volume and fall in the share price is anchor investors’ booking profits. Anchor investors got an allotment of 30 per cent of the IPO size. They have a lock-in period of 30 days. This means that they cannot sell their shares before 30 days from the allotment, which come to an end on August 23.   

Zomato’s IPO was worth around Rs 10 thousand crore and 30 per cent was for anchor investors, who made a handsome profit of around 70 per cent in one month, and hence, booking some profit was totally accepted.    

Going ahead, there will be a supply overhang and even the market is looking nervous at the current moment. Hence, investors should wait for the dust to settle down, and only then, they may think of entering the stock.  Look out for Chintan Tatva, whose lock-in period for anchor investor is ending soon.