Promoter Selling Drives Record Large Trades In June

Large deals in the Indian equity markets have hit another milestone, swayed by promoters offloading stakes amid the record-scaling benchmark indices. In June, the combined value of bulk and block trades in the world's fifth-largest stock market crossed the Rs 1-lakh-crore mark and is the highest in at least five years.

Bullish market trends and good growth prospects are the reasons behind the heightened activity in the bulk and block space by institutional investors, according to Kranthi Bathini, director of equity strategy at WealthMills Securities Pvt. "This is the key reason for the sudden rise in trades."

The volume of bulk and block deals for June stood at Rs 1.01 lakh crore in comparison to Rs 35,779 crore in the preceding month, according to the data from Prime Database.

This comes amid a time when the promoters squaring off their stake has risen comparatively compared to the previous years. Promoters have offloaded shares worth Rs 91,879 crore in the first half of the year, while they took home Rs 1.26 lakh crore during the previous calendar year, Prime Database data showed.

Promoters of 37 companies in the NSE Nifty 500 sold around Rs 87,400 crore so far this year till June, the highest in the last five years, Kotak Securities said in a recent report. It also said the private promoter holding in the S&P BSE 200 declined to 38.8% in the March quarter, a 330-basis-point fall from 42.1% in the December 2022 quarter.

The markets look very euphoric and this exuberance is also the reason for promoters to trim their stake, Bathini said.

The sectors that have seen the most promoter stake sales in terms of value in 2024 include telecommunication services, information technology and automobiles, according to Kotak Securities.

Business expansion, compliance with minimum public shareholding norms, debt reduction, as well as strategic realignment of promoter interests are the reasons the brokerage cited for this rising trend.

Most big deals happen with negotiations to any institutions, and this improves accountability and transparency. Therefore, promoters offloading stake is necessarily not a bad thing, and would be if they do so in the open market, Bathini said. "If the bull market continues, we can see this trend continuing."

The big trades during the month were led by Indus Towers Ltd. with a deal value of Rs 16,734 crore, which the Vodafone Group proposed to offload as part of their fundraising plans.

Large trades where promoters sold stakes include Gland Pharma, and Happiest Minds Technologies. June 19 was lit up with activity in the bulk and block deals as deals over Rs 20,800 crore was closed during the session.

India's equity gauges have been on a record spree and recorded the best monthly gains in June. The NSE Nifty 50 claimed its psychologically crucial 24,000 mark and rose the most in a futures and options series this year last week.

Meanwhile, overseas investors also closed an eventful June as net buyers of Indian stocks after being sellers for the last two months. The positive attitude was aided by the assurance of policy continuity and a sharp recovery in markets.