Lock in period refers to that period for which investments in the shares or Mutual funds cannot be sold or redeemed. It also stands for the time duration for which investors must hold their shares or investments before they could be sold.

There are different types of lock ins for different types of investors. For example anchor investors typically have a lock-in period where 50 percent of their shares are locked for 30 days and the remaining 50 percent for 90 days from the date of allotment. Similar restrictions are also placed on promoter shares in the IPO companies.

An anchor investor is an institutional buyer who purchases a significant number of shares in a company at a fixed price before its initial public offering (IPO).

Investors should pay attention to lock-in periods because when the lock-in period expires, more shares become available for trading. This increases the free float in the market, meaning there are more shares available to be bought and sold.

With more shares are in circulation it can lead to a decrease in the company's stock price. However, that’s not a rule which would occur every time. But usually due to the increase in the number of shares, the prices usually fall.

The market regulator had introduced lock-in periods to safeguard the interest of small investors by ensuring stability in the share prices of the newly-listed companies, at least for some time.

The regulations also help restrict promoters and institutional investors from early exit if the stock gets listed at high valuations. It therefore also protects the small investors from being fooled and trapped by market manipulators or company promoters during the IPO.