So why are promoters selling?
Promoters of 37 NSE 500 companies sold Rs 87,400 crore (US$10.5 bn) in 6MCY24.
"The combined holding of domestic investors (MF + BFI + retail) has increased by 80 bps to 23.5% in the Mar-24 quarter from 22.6% in Dec-22 quarter.
The holding of FPIs has declined to 20.5% from 21.4% over the same period," Prasad said.The selling by promoters is not just linked to current bullish market conditions.
We would note that OFS amounts have significantly exceeded fresh capital issuance amounts in the past few years," Kotak said.
So why are promoters selling?
PE exits
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With retail investors continuing to be on a buying spree using the mutual fund route, the trend of stake sale by promoters in NSE500 companies looks on track to cross the Rs 1 lakh crore mark "The trend of promoter stake sale transactions accelerated in 1HCY24. Promoters of 37 NSE 500 companies sold Rs 87,400 crore (US$10.5 bn) in 6MCY24. This figure is the highest in the past five years and is on track to beat the figure of Rs 99,600 crore (US$12.4 bn) in 2023, which was dominated by stake sales by Adani Group promoters in various Adani Group companies," said Sanjeev Prasad of Kotak Institutional Equities Private promoter holding in BSE-200 has declined to 38.8% in March quarter from 42.1% in December quarter, consequent to the large promoter sell-down. "The combined holding of domestic investors (MF + BFI + retail) has increased by 80 bps to 23.5% in the Mar-24 quarter from 22.6% in Dec-22 quarter. The holding of FPIs has declined to 20.5% from 21.4% over the same period," Prasad said.The selling by promoters is not just linked to current bullish market conditions. "The key considerations include business expansion, compliance with minimum public shareholding (MPS) norms (Mankind), debt reduction ( Vedanta ), promoter family holding adjustments andpersonal considerations ( Cipla , M&M) and strategic realignment of the interests of promoters ( Bharti Airtel Indus Towers )," Prasad said.The current bull market has seen even PE and VC investors making exits through both IPOs and block deals in the secondary market. "PEs have used bullish secondary market conditions to sell their stakes, either in full or in part, which is entirely logical for them, given the limited period and nature of their investment mandates. We would note that OFS amounts have significantly exceeded fresh capital issuance amounts in the past few years," Kotak said.
