Short-Sellers Trapped in Indian IPOs: Meesho and Groww Cases Explained

Short-sellers in newly listed Indian startup stocks are facing losses due to sharp post-listing rallies, thin supply of shares, and India's settlement rules. When short-sellers cannot deliver shares on settlement day, the exchange intervenes through an auction mechanism, which results in higher prices and increased losses for trapped short-sellers. This is particularly problematic in IPOs with low free float, as it amplifies price moves and makes short-selling riskier.