Zerodha CEO Nitin Kamath noted high gains in IPOs up to a few days after their listing and attributed them to a technical factor known as “a short delivery.”

Kamath explained, “many traders attempt to short these stocks intraday, expecting a fall, but if the stock hits the upper circuit, they get trapped with no buyers to sell to. This leads to what’s called a short delivery.”

He added that when this happens the to settle the trade, the exchange conducts an auction the next day between 2:30 p.m. and 3:00 p.m. Rates at these auctions prices can reach up to significant premiums from the original market prices.

The Zerodha CEO cited the example of Meesho’s auction and said, “Meesho’s auction price was Rs 258, while the market price at the time was around Rs 226.

Kamath’s remarks come amid Meesho’s blockbuster performance a week into its listing on the exchanges. The stock price has more than doubled in just seven sessions, increasing by 110%.

The shares reached an all time high on Thursday after rising 17.6% to Rs 254.40 apiece. The stock settled nearly 9% higher at Rs 235.57 apiece.