look news india
Promoters sell holdings worth Rs 1 lakh crore: Due to the one-sided rise in the Indian stock market, experts including big investors, renowned institutions, rating agencies are giving their opinion and advising to adopt a cautious attitude and not to jump into the market and get too excited. The market valuation is so high that the shares of many companies will never see these prices again, despite the advice that retail investors are becoming reluctant to invest directly in the market.
Wholesaling by promoters
Whether the market is overbought by a single company or there is a general sell-off; every decline has been digested and a sharp recovery has been seen in the last two-four years, but the figures present a different picture. The founders of the company, also known as promoters, are earning huge cash from their own company. There are reports of promoters earning thousands of crores of rupees not only from IPO but also from the secondary market, yet retail investors are forced to fly high by buying shares at any cost.
OFS and stake sold through block deal
According to the report, so far this year, promoters have raised about Rs 50 crore. Shares worth Rs 1 lakh crore have been sold. According to data from Prime Database, promoters of more than 250 companies have raised about Rs. 97,000 crore has been sold. During this period, promoters of listed companies also raised Rs. About 7300 crore has been sold. Apart from this, Vedanta will sell 1.51 percent equity in Hindustan Zinc for about Rs 1.5 crore. OFS of 3100 crore is still going on.
Warren Buffet has $277 billion in cash
Excessive selling by promoters is a reflection of low credibility in the valuation of the company among the founders or largest investors of the company or expectation of better returns on investment elsewhere than that company. Not just the promoters of top Indian companies, but the world's legendary investor Warren Buffet is also sitting on an all-time high cash pile of $277 billion. Berkshire Hathaway's cash, cash equivalents and short-term securities increased by $88 billion in the second quarter of the year to an all-time high of $277 billion. There is a view among market experts that the selling by promoters and large institutional investors and the moves by other large investors indicate that the stock markets have reached record highs and bearishness is stronger than bullishness.
Vodafone-ITC, Indigo promoters are selling
This year, the largest stake by a promoter in the Indian market is through British telecom company Vodafone in Indus Towers for Rs. 15300 crore. Apart from this, promoters including Rakesh Gangwal, co-founder of the country's largest airline Indigo, have invested Rs 10 crore in it. Shares worth 10150 crore have been sold. Tata Sons, the holding company of the Tata Group, has invested Rs 10 crore in it. Shares worth 9300 crore of TCS have been sold. Apart from this, large share sales have also been seen in Mphasis, Vedanta, Bharti Airtel, Whirlpool of India, Samvardhan Madrasan, Hindustan Zinc, Cipla, NHPC and Teamcan India. If OFS from the IPO route is also included in this, then the list will become longer.
British American Tobacco bought 3.5 percent stake in ITC in March for Rs. 17400 crore. ITC has no promoter. Similarly, SoftBank also ended its business relationship with Paytm and the promoters and founders have sold all stakes. Taking advantage of the boom in the market, PE, VC funds have tried to exit listed companies by selling full or partial stake.
Increased purchasing by local organizations
This year, local bodies have spent a total of Rs. 3.9 lakh crore to buy equity. Strong flows from institutional investors, mutual funds and retail investors have maintained a favorable counterparty environment. Retail investors are continuously investing money in the market directly and indirectly through mutual funds. In such a situation, the exit of a giant company indicates something that is beyond the understanding of small investors. There is also a consensus that taking advantage of the increased liquidity in the market, promoters have sold stakes and become opportunists. The counterparty has welcomed other small and large investors into the company by giving them stakes and providing an opportunity to unlock value.