6 days ago
Rs 43,000 crore selloff by promoters! Insider exits flash warning sign for Nifty bulls
Just as
Nifty
notched a hat-trick of monthly gains with a 12% surge through May, a parallel trend has emerged: India Inc's promoters are cashing out. In what could be viewed as a potential red flag for the ongoing market rally to accelerate further, promoters and other large shareholders have offloaded shares worth a staggering Rs 43,400 crore in May alone.
This comes at a time when foreign institutional investors (FIIs) and domestic institutional investors (DIIs) have together pumped in nearly Rs 80,000 crore into Indian equities last month, alongside steady retail and
HNI
buying. The sell-off, led by high-profile block deals, is raising eyebrows about insider sentiment, especially with valuations running high.
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Topping the list is
Rakesh Gangwal
, co-founder of
IndiGo
, who sold shares worth over Rs 11,560 crore on May 27 in a fresh round of stake trimming in
InterGlobe Aviation
. A day later,
British American Tobacco
(BAT) offloaded a 2.5% stake in
ITC
through its subsidiary for around Rs 12,900 crore, one of the largest single-day exits in recent memory, shows data compiled from Prime Database.
Earlier in the month, Singtel sold
Bharti Airtel
shares worth Rs 12,880 crore on May 16. Meanwhile, General Atlantic Singapore Fund exited
KFin Technologies
in a Rs 1,790 crore deal, and Sajjan Jindal Family Trust pared its stake in
JSW Infrastructure
for Rs 1,210 crore.
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Prime Database shows promoter selling activity also surfacing in smaller firms like Gravita India, PG Electroplast, TD Power, Paras Defence, and Ami Organics, fanning concerns among market watchers.
Block deals continued this week as well with action seen in Zinka Logistics, Aptus Value Housing Finance,
Yes Bank
and Ola Electric on Tuesday. PE investor True North and others sold over $175 million worth of Niva Bupa Health Insurance shares on Monday.
Siddharth Khemka of Motilal Oswal Financial Services pointed to liquidity dynamics behind the move. 'If FIIs want to buy, and DIIs and retail don't want to sell, then who provides supply? The promoters are stepping in. They want liquidity – they can't call up individual investors to offload 3% blocks. When institutional money is present, that's when promoter selling comes into play,' he said, adding that block deals and IPOs are likely to surge again as markets stabilize.
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Anshul Saigal, founder of Saigal Capital, cautioned against over-interpreting promoter sales. 'There can be multiple reasons to sell – like the Whirlpool case where the parent is in distress. I pay less attention to promoter sales and more to purchases. There's only one reason to buy – the belief that the stock will go up.'
However, Sandip Sabharwal, market expert, flagged a possible contradiction. 'If companies are guiding for strong growth but promoters are dumping large volumes at high valuations, that's a dichotomy. It raises questions. I'm more concerned about small and midcap promoter sales than the larger ones like InterGlobe or BAT's sale in ITC. But even large-cap exits pull liquidity from the system and cap market upside.'
While the promoter exit wave may be driven by individual circumstances – ranging from global financial pressures to portfolio rebalancing – the timing is unmistakable. As the market roars ahead, insiders are cashing in. Whether it's a canary in the coal mine or just business as usual remains to be seen, but for now,
Nifty bulls
may want to tread with a touch more caution.
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(
Disclaimer
: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
