Groww Shares Tank 10% After Massive 94% Rally: What Triggered the Sudden Sell-Off?

Shares of Billionbrains Garage Ventures, the parent company of investment platform Groww, fell sharply by 10%, hitting the lower circuit just days after witnessing an extraordinary six-day surge of more than 94% from its issue price. The sudden reversal has sparked widespread discussion in market circles about the sustainability of the recent rally.

Why Did Groww’s Stock Fall After a Strong Rally?

Market experts say the decline was not unexpected. According to veteran investor Ambareesh Baliga, the steep run-up was largely driven by technical factors rather than fundamentals.

Baliga explained that the stock had a very low float, which meant there were few shares available for trading. Many traders initially shorted the stock expecting profit-booking post-listing. Instead, the opposite happened — a short squeeze pushed prices sharply upward as short sellers struggled to buy back shares in time. Repeated daily auctions of short positions further fuelled bullish sentiment.

But Baliga warned that such moves are often temporary.

High Volumes but Limited Deliverable Shares

According to Moneycontrol, more than 46 crore shares of Groww changed hands on Tuesday, but only 8.24 crore shares were actually available for delivery. Over 30 lakh shares entered the NSE auction window as short sellers were unable to arrange stock for settlement.

This mismatch between trading volume and available supply intensified volatility.

Analysts: Don’t Chase High-Risk Momentum Stocks

Ajit Mishra, Senior VP – Research at Religare Broking, cautioned investors against reacting impulsively to daily price swings.

He advised traders dealing with high-beta stocks to have a clear exit plan, warning that sudden trend reversals can lead to heavy losses.

Valuation Concerns Growing

The valuation of Groww has become a key concern among analysts. A significant number of shares purchased at higher levels before listing may soon enter the market when anchor investor lock-ins expire.

Baliga pointed out that many investors bought Groww shares at around ₹135, which is higher than the issue price.

“As these shares unlock over the next few months, we could see increased selling pressure,” he said, adding that Groww’s valuations appear “expensive” compared to other players in the sector.

What’s Next for Groww?

While the stock’s fall on Wednesday is partly attributed to technical factors such as short covering and low float, experts warn that fundamental risks remain.

With large quantities of shares set to unlock in the coming months and valuations stretched, analysts expect more volatility ahead.