The year 2023 has seen a sharp increase in sell-downs by promoters (majority shareholders) compared to the previous years. The selling by promoters largely reflects strategic compulsions. Domestic investors have absorbed the bulk of the sell-downs. Here are the 4 charts that give you more insights.
2023 on a YTD basis has seen the selling by promoters (through bulk/block deals in NSE-500 stocks) amounting to ₹874 billion. This is the highest quantum since at least 2018, as per available data. According to Kotak Institutional Equities, only a small portion of promoter sales to bullish equity market conditions. A large portion of the sales by promoters pertains to holding companies of promoters raising cash to manage ‘high’ purported debt in promoter holding companies (like Adani Group companies). Another meaningful portion is due to the exit of one of the promoters from a company (HDFC Life, CIE India) for strategic reasons (portfolio rationalization).
Sectors: Maximum selling
Automobiles and components, capital goods, electric utilities, IT services and transportation sectors have seen the bulk of the promoter selling so far this year. However, insurance and IT services accounted for a large portion of promoter selling over 2018-23 period
Adanis leading the way
While Adani group accounts for around 40 per cent of total promoter selling in NSE 500 companies, promoters of companies such as Coforge, Sona Comstar and Indigo have also seen significant selling
As a result of promoter sell-downs, (promoter holding in the BSE-200 Index has declined to 48.8 per cent in the Jun-2023 quarter (latest available data) from 50.3 per cent in the Dec-2022 quarter. The combined holding of domestic investors (Mutual Funds + Banking Finance & Insurance + Retail Investors) has increased by 90 basis points (bps) to 23.5 per cent at the end of the Jun-23 quarter. The holding of Foreign Portfolio Investors has increased modestly to 21.7 per cent over the same period, while the holding of others (AIFs, PMSes fall under this category) has increased 31 bps to 6 per cent.