Promoters go on an encashment spree, raise ₹62,000 cr via stake sales in 2024

livemint.com:

MUMBAI : Indian promoters have offloaded shares worth ₹62,000 crore in the first six months of 2024, the highest since 2019, showed data compiled by the markets data provider Prime Database. Promoters had raised 61,277 crore in the year-ago period. While promoters tend to go on an encashment spree during a bull run, this time most of them have sold their stakes at significant discounts to the previous day’s closing price.

In the biggest block deal, IndiGo co-founder Rakesh Gangwal sold a 5.8% stake in the airline’s parent InterGlobe Aviation Ltd for ₹6,785.7 crore in March. It was followed by Mphasis Ltd's promoter selling shares worth ₹6,736 crore, and Bharti Airtel’s foreign promoter Pastel selling a stake worth ₹5,849 crore. The benchmark Nifty 50 has surged 10.5% in 2024 so far, registering an all-time high of 24,036.60 points on Thursday.

Though attractive returns are one the key reasons for company managements that have only been investing in their business for liquidating stakes, a promoter may choose to sell shares for various reasons, including personal debt reduction, portfolio diversification, and strategic treasury management, said Varun Saboo, head of equities at Anand Rathi Shares and Stock Brokers Ltd. He added that these reasons are not concerning in a bull market. Long-term promoters, who have invested heavily in their businesses, may also sell for philanthropic reasons.