Promoter, PE & VC selling crosses Rs 40,000 crore in 2 weeks: Red flag for Nifty bulls?

Time of India

7 hours ago

Raising eyebrows about stretched valuations and supply overhangs in a soaring market, massive selling by promoters, private equity and venture capital investors has crossed Rs 40,000 crore in June so far as they continue to dump stakes at breakneck pace.
Driven by daily large block and bulk deals, the massive selling spree is set to surpass last month's Rs 43,000 crore selling total, with heavyweight transactions dominating the landscape. On Tuesday alone, Vishal Mega Mart's promoter sold a 19.6% stake to mutual funds in a Rs 10,220 crore bulk deal, while Bajaj Finserv's promoter offloaded approximately Rs 5,500 crore worth of shares earlier in the month, according to Prime Database and NSE.
The selling frenzy includes some of the market's most prominent names. Walmart-owned Flipkart divested its entire 6% stake in Aditya Birla Fashion & Retail (ABFRL) through a Rs 588 crore bulk deal, while Reliance Industries' Rs 9,580 crore stake sale in Asian Paints added substantial weight to the two-week tally.
Other companies witnessing promoter stake sales include Alkem Laboratories, Jubilant Foodworks, Azad Engineering, Suzlon Energy, and Kaynes Technology India.
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The breakdown shows
promoter selling
of Rs 23,820 crore, alongside PE/VC divestments worth Rs 8,500 crore in the first fortnight of June. If you add RIL's stake sale of Rs 9,580 crore, the total adds up to Rs 41,900 crore.
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Capital Migration Pattern Emerges
"Where is this capital flowing? Evidence points to real estate and alternative investments like Portfolio Management Services (PMS) and Category II/III Alternative Investment Funds (AIFs)," Akshay Badjate, Fund Manager at Merisis PMS, told ET Markets.
Latest SEBI data reveals Category II AIFs, including real estate and private equity funds, managing ₹13.58 lakh crore as of March 2025, up from ₹9.54 lakh crore in September 2023—a 42% surge. Category III AIFs focused on listed equities and derivatives grew 58% year-on-year to ₹2.3 trillion by March 2025.
"Over the last two years (June 2023–June 2025), insider selling has coincided with ₹5.5 lakh crore in combined Category II/III AIF and PMS inflows, with real estate absorbing nearly ₹74,000 crore by December 2024," Badjate adds.
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Market Resilience Despite Supply Overhang
Despite the selling pressure, domestic institutional investors have provided crucial support. DIIs have been net buyers with purchases exceeding ₹49,000 crore in June, while foreign institutional investors turned net sellers, offloading nearly ₹7,000 crore worth of equities.
'While the increased supply from promoter and PE/VC selling indeed creates a supply overhang, the substantial domestic inflows, particularly from mutual funds, insurance companies, and pension funds, have, to date, cushioned the market and prevented any sharp correction. However, this rising supply could potentially cap upside potential in the near term, especially if global volatility persists or domestic flows begin to slow down,' says Mayank Jain, Market Analyst, Share.Market.
Strategic Exits, Not Panic Selling
Sunny Agrawal, DVP and Fundamental Research Analyst at SBI Securities, argues that promoter selling isn't necessarily a red flag as many PE funds are bound to return money to their investors and have limited duration for which they can remain invested. Hence, they are bound to book profit at an opportune time, he said.
"Regarding promoter selling, many times they too sell the equity in the company to meet personal requirements and hence cant be a red flag always. Hence, inference can vary on case to case basis," Agrawal adds.
Valuation Concerns Mount
However, concerns about stretched valuations persist. "The heavy insider selling is not a definitive signal of a market peak but underscores valid concerns about current unsustainable valuations, particularly in several pockets of the small- and mid-cap segments," warns Badjate.
The Nifty Midcap 150 declined 1.5% in June, reflecting selective pressure on broader market segments.
"Selling by promoters/PE is being witnessed in few stocks and in those companies, in the short term, upside can be capped as most of the demand from institutions have been fulfilled," says Agrawal.
"From the overall equity market perspective, cap on upside is likely to be limited, as the market has become narrow and investors are chasing select companies which have robust earnings growth outlook in the current uncertain business environment."
Investment Strategy Implications
At Merisis PMS, "one of the key parameters to screen viable investment opportunities is to look for Companies where promoter / insider holding remains steady in spite of strong recent price performance or is in fact on the rise, as it reflects the promoter's internal optimism around his business prospects for the foreseeable future," states Badjate.
Share.Market's Jain observes that "large investor selling, particularly during periods of high valuations, serves as a signal that warrants caution rather than an outright red flag."
'It reflects a combination of strategic portfolio decisions and an attempt to capitalize on favorable market conditions. Investors should closely monitor whether domestic inflows continue to offset the increased supply and remain alert for any signs of weakening market fundamentals or a sharp reversal in sentiment. In this environment, it is prudent for investors to focus on companies with strong fundamentals and robust growth prospects,' he explained.
As Sensex, Nifty eye fresh record highs, the key question remains whether robust domestic inflows can continue absorbing this unprecedented supply pressure.
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