look news india
Ahmedabad: About 462 promoters reported a reduction in their shareholding during last March. This is the highest figure in the last 12 quarters. These figures have been rising for four consecutive quarters and the major stock market indices have hit record highs during this period. During this period, promoters of 289 companies increased their stake. In every quarter since March 2023, promoters have sold more stake than they increased their stake.
The market fell in March 2023 due to fears of a banking crisis after the failure of Silicon Valley Bank. The analysis considers 3,086 listed companies with available data for the last 13 quarters. The number of companies in which promoters have increased stake after June 2021 is the highest.
According to equity analysts, it is natural for these promoters to cash out part of their assets. Some promoters may have sold stakes to buy assets. It is possible that some family members are no longer involved in the business in which they currently have promoter stakes and want to exit. Promoter sales indicate that the money is not going anywhere else.
The promoters might have thought that the prices were higher than the fundamentals. Whenever the market is booming or the economy is doing well, the promoters might have some ideas about new ventures that might be risky for the company to get involved in. So they sell some of their stake and invest that money in emerging businesses.
Sometimes there is a family settlement as well. Generally, the promoters have most of their wealth tied up in the company and they are trying to diversify. This trend will continue as long as the market keeps growing.
This momentum has continued in the current quarter as well. Major promoter stake sale deals include InterGlobe Aviation, which operates India's largest airline IndiGo. Nearly 2 per cent stake in InterGlobe Aviation was sold for Rs 3,700 crore and 2.7 per cent stake in pharmaceutical company Ciplan was sold for Rs 2,700 crore.
Analysis shows that the number of private sector promoters has decreased in the case of companies listed on NSE. As of March 2024, their share in the total value of listed companies was 41 per cent. In September 2020, this share was much higher at 45.39 per cent. A large number of promoters increased their stake during the crisis in early 2020. In March 2019, the promoter's stake was 40.88 per cent.
